Investing.com -- Citi analysts revised their MedTech coverage following a volatile first quarter, with several rating changes and adjustments to target prices.
While Q1 management commentary broadly aligned with expectations—quantifying tariff headwinds and outlining mitigation plans—the backdrop changed quickly.
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A 90-day U.S.–China tariff de-escalation announced on May 12 rendered much of the forward-looking guidance "moot," Citi said.
Despite this, Citi sees core MedTech fundamentals as stable, citing continued strength in volumes, pricing, and capital expenditure. Still, stock performance was highly sensitive.
"Volatility was steep, somewhat given fundamentals, but also positioning," the analysts noted. The sector now looks ahead to Q2 results for the next key catalyst.
In the latest update, Citi downgraded Becton Dickinson and Company (NYSE:BDX) to Neutral from Buy, while upgrading Integer Holdings (NYSE:ITGR) to Buy from Neutral.
At the same time, it closed a Negative Catalyst Watch on Haemonetics (NYSE:HAE), maintained a Positive Catalyst Watch on Cooper Companies Inc (NASDAQ:COO), and reiterated Boston Scientific (NYSE:BSX) as a Top Pick.
Edwards Lifesciences (NYSE:EW) has also been added to that list, while Insulet (NASDAQ:PODD) was removed.
For Cooper, which reports its fiscal Q2 2025 results on May 29, Citi expects foreign exchange (FX) to be a central topic. The outlook is helped by positive signals from competitors and a "healthy" mid-single-digit growth in the consumer segment.
Citi models 6.5% year-over-year (y/y) ex-FX growth for CooperVision (CVI) sales and 6.9% for CooperSurgical (CSI) sales. The brokerage maintains a Buy rating and a Positive Catalyst Watch on COO.
Tariff-related commentary has rapidly evolved, with most MedTech names initially building tariff costs into 2025 forecasts. But the May 12 development has now shifted the narrative.
Citi noted that "existing guidance [is] stale," though companies have reiterated mitigation efforts. GE HealthCare (NASDAQ:GEHC), for instance, suggested a 100 basis point reduction in tariff rates could lift 2025 EPS by $0.40.
Citi also opened a short-term positive view on Establishment Labs Holdings Inc (NASDAQ:ESTA) and Tandem Diabetes Care (NASDAQ:TNDM), both rated Neutral.
Upcoming events—the former’s investor day on June 12 and the latter’s appearance at the ADA meeting in late June—are expected to support share prices in the near term. "Generally, stocks trade up into such events, even if it doesn’t ’hold’ the price appreciation afterwards as positioning normalizes," Citi analysts wrote.
As part of its reshuffling, Citi removed Insulet from the Top Pick list after a 25% year-to-date gain and nearly 72% increase over the past year. However, it reiterated a Buy rating and raised the price target to $380 from $320.
Edwards Lifesciences was added as a Top Pick on the back of several product and clinical milestones expected over the next 12 to 18 months, including European and U.S. launches for SAPIEN M3 and expanded indications for TAVR.
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