TD Cowen analysts Mathew Blackman and Drew Ranieri have named their top three medtech picks under their evolving “Bones, Bots and No More Shots” portfolio coverage.
In a Jan. 27 note to clients, the analysts named Zimmer Biomet as their top pick in Bones (orthopedics), Intuitive Surgical for Bots (soft tissue robotics) and Tandem Diabetes for No More Shots (insulin delivery).
First up is Zimmer Biomet, the orthopedics company that uses its Rosa robotics platform for knee implants and Rosa One for robotic neurosurgery. TD Cowen upgraded the stock to Buy with a $109 price target, describing Zimmer Biomet as a “story stock for an out-of-favor name.”
The analysts noted that while the shares have underperformed, falling from about $110 a year ago to $87 as of Jan. 27, the company’s underlying business “isn’t as impaired as the current valuation suggests.”
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Last year, the company also acquired Monogram Technologies for $177 million, adding its hands-free robotic system for total knee replacements to bolster the Rosa platform.
Its second pick is Intuitive Surgical, which recently received FDA and European approval for its da Vinci 5 surgical robot. The system is cleared for adult and pediatric use across multiple endoscopic procedures, including urology, gynecology and general laparoscopic surgery of the chest, abdomen and pelvis.
New to TD Cowen’s coverage, the firm initiated Intuitive Surgical at Buy with a $660 price target. The stock is currently trading just above $529 a share.
While a consensus long, the analysts said they conducted differentiated survey work and sensitivity modeling that, in their view, show the Street is underestimating the durability and upside of procedure-volume growth, positioning Intuitive as a “must-own, secular growth story.”
And finally, in the No More Shots category, the analysts highlighted Tandem Diabetes, maintaining a Buy rating and raising their price target to $25. The stock was trading at $20.69 as of Tuesday morning.
Calling it another story stock, Blackman and Ranieri said they back the call with differentiated modeling and survey work.
Tandem markets its t:slim X2 insulin pump with Control-IQ+ advanced hybrid closed-loop technology, which can integrate with Abbott’s FreeStyle Libre 3 Plus continuous glucose monitoring sensor.
This comes as TD Cowen is now initiating on six new names and transferring coverage of five companies previously covered by Joshua Jennings, M.D. “With this rollout, TD Cowen MedTech (led by Blackman & Jennings) now covers 35 companies and 8 verticals,” the firm said in its note.