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IS MEDTECH READY TO TURN THE CORNER?

After five straight years of underperformance, the medtech sector may finally be approaching an inflection point.

Italian broker Equita says the weak run of the iShares US Medical Devices ETF IHI.P – their proxy for medtech - has pushed valuations to their lowest relative levels in two decades, even as fundamentals look set to improve.

Sentiment has been battered by policy headwinds: U.S. healthcare budgets have come under pressure, Europe has refocused spending on rearmament and China has extended volumes‑based procurement to a wider set of devices.

That backdrop contributed to a modest 4% EPS CAGR for the sector between 2023 and 2025.

But Equita analyst Davide Marchesin expects earnings momentum to pick up, with EPS growth seen more than doubling to 10% this year and trebling to 12% in 2027.

Meanwhile, the ETF trades at only a 10% premium to the S&P 500 .SPX on a forward PE metric, well below the long-term 35% average premium.

Marchesin highlights three preferred picks for the quarter: Diasorin DIAS.MI, EssilorLuxottica ESLX.PA and Straumann STMN.S.

(Danilo Masoni)

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