Spinoff Medical Technology Stock Makes Top Pick for Matthew Mishan at KeyBanc

July 22, 2019

Matthew Mishan, CFA, is Vice President, Equity Research Analyst at KeyBanc Capital Markets Inc. — KBCM. His research coverage is focused on medical products.

Prior to his promotion to Senior Analyst, Mr. Mishan worked in equity research product management for KBCM. Before that, he was a research associate on KBCM’s automotive team for several years.

In this exclusive 2,963 word interview, exclusively in the Wall Street Transcript, Mr. Mishan details his view on the investment opportunities in the medical technology sector.

“You have developed markets, including a U.S., European and Japanese base of revenue, as well as companies that are really building up their emerging markets’ infrastructures.

Despite what we have seen in some of the global slowdown and the Brexit-related questions, we have not seen any kind of real change to demand coming out of Europe or the emerging markets.

While some industrial companies have seen a purchasing slowdown, we have not seen the buildout of health care infrastructure delayed in the emerging markets and China in particular.

It is just a priority for those countries to build out their health care infrastructure. If there is going to be a gigantic trade war about to break out, health care might be the very last front to get touched.”

Mr. Mishan explores the opportunity presented by one his favorite stocks:

“My favorite name is still Avanos. The rationale behind Avanos as a medical device company is that it was originally part of Kimberly-Clark (NYSE:KMB) and spun out as an entity called Halyard Health that had two pieces to it.

It had a high growth, high margin medical device piece and then also $1 billion in sales of lower margin commodity items like surgical gowns, gloves and all of the everyday stuff that you would see in the hospital.

They sold to a distributor, Owens & Minor (NYSE:OMI), the low margin commodity-oriented medical supplies business. They are now left as a smaller device business.

It is going to take some time for them to realize their value as the divestment left them with a lot of stranded costs, but when you look at what the company and its building blocks are, you have high market share positions and good growth opportunities with high margins.”

Get the complete detail on Avanos and many other stocks by reading the entire 2,963 word interview, only in the Wall Street Transcript.