Med tech stocks tumble during stock market rout. Is it time to buy low?

Medical device companies were not exempt from the hammering given equity to prices last week, which extend into Monday. According to Stephens equity analyst Chris Cooley, some of the hardest hit companies were RTI Surgical ($RTIX), Abiomed ($ABMD), Dexcom ($DXCM), Insulet ($PODD) and Staar Surgical ($STAA). Meanwhile, Telefex ($TFX), Steris ($STE), Cooper Companies ($COO), Boston Scientific ($BSX) and Sirona Dental ($SIRO) had smaller contractions in their financial valuation ratios. The decline is bad news for owners of med tech stocks, but could present an opportunity for those looking to participate in the stock market. Moody's recently raised its outlook for the U.S. medical products and devices industry to positive from stable. And Cooley wrote, "Generally speaking, the aforementioned possess business models that generally prove insulated to economic swings and possess relative pricing power. Additionally, all have favorable free cash flow characteristics and, with the exceptions of COO and BSX, have low debt to capitalization ratios." But it's important to note that despite med tech's favorable business profile, the recent rout made clear that investors aren't treating med tech stock differently from the others when the market heads down, so at least in the short term, their performance will be tied to the presence (or absence) of big external shocks, like more bad news from China, as well as investors' general mood toward stocks as an asset class. More

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