Citi analysts stressed being ‘cautious’ on US medical technology stocks entering the third quarter, as the sector tends to underperform in September and October before recovering in November.
In a note to clients on Tuesday, the analysts wrote that the sector was hit particularly hard this year as investors rotated out of healthcare and into technology.
In addition, the Trump administration announced a Section 232 investigation into medical equipment and devices.
They believe the pullback, though, could be a buying opportunity, reiterating Boston Scientific Corp (NYSE:BSX, ETR:BSX), Edwards Lifesciences Corp (NYSE:EW, ETR:EWL), and Irhythm Technologies Inc as their top sector picks.
The analysts also see positive catalysts ahead for Penumbra Inc.
At the same time, they downgraded GE Healthcare Technologies Inc (NASDAQ:GEHC) to ‘Neutral’ from ‘Buy’, citing the anticipation of a gradual improvement in revenue growth to “slowly translate to multiple expansion and stock performance.”