April 6th, 2022 | 10:46 CEST
Siemens Healthineers, Perimeter Medical, Siemens, SAP - After BioNTech, now the push for MedTech shares!
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Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Siemens Healthineers - No negative impact from Ukraine crisis
Siemens Healthineers is sticking to its forecasts for the current fiscal year despite the Ukraine war. CEO Bernd Montag has expressed confidence in the Company's ability to continue growing profitably even in a generally tense environment. Today, healthcare is no longer part of a normal economic cycle, as basic supplies of technical equipment and medical services have been taking up increasing shares of gross national product in recent years, as healthcare costs in the developed world continue to rise. And every country is planning to expand its medical infrastructure. The 2-5% increase in military spending in NATO does not mean that spending on medical care will be capped.
It is also interesting to note that Siemens Healthineers is sticking to its contractual obligations to Russia. After all, the Russian people are not responsible for the war and, from this perspective, should continue to have access to the German high-tech manufacturer's medical achievements. For the current fiscal year 2021/22, sales are expected to grow by 3-5%, and earnings are expected to increase by more than double that rate. In our opinion, the share should now rise dynamically above EUR 60 with this confirmation. Otherwise, there is a risk of a technical decline to the previous breakout zone at around EUR 52.
Perimeter Medical Imaging AI - Tracking cancer visually
Around 10 million people worldwide die of cancer every year. One issue to be solved in cancer diagnosis all the way to the operating room is the clear identification of damaged cells or tissue. Current technologies lack the image resolution to detect microscopic features indicative of in situ disease. In addition, it takes several days to weeks to obtain a pathology report on the condition of the margins.
Canadian diagnostics expert Perimeter Medical Imaging AI (PINK) specializes heavily in the area of real-time visualization. The technology company focuses on instrumental support for cancer treatment, primarily in ultra-high-resolution imaging systems. Artificial intelligence supports real-time analysis to derive a patient-appropriate decision already during the procedure. Cancer is still at the forefront of widespread diseases, as there is currently no form of therapy that promises a 100% cure.
The Company marked an important milestone with 510(k) clearance from the US Food and Drug Administration (FDA) for the commercial launch of its flagship Perimeter S-Series OCT platform. Currently, Perimeter's clinical team is focusing on the ongoing pivotal study. The cost reduction potential in this area is several thousand dollars per patient. So oncology facilities, in particular, are likely to have a high level of interest in Perimeter's innovations.
With the capital increase carried out at the end of January, the Company raised CAD 48.7 million, offering plenty of scope for further research and studies. Currently, the Company is participating in the 23rd annual meeting of the American Society of Breast Surgeons in Las Vegas, which should draw a lot of attention. The PINK share is quoted in Canada at around CAD 2.84, which brings the Company's market capitalization to CAD 176 million. From a purely technical point of view, the stock is currently trading at the lower end of the price range. Still, in a favorable scenario, the ongoing studies provide enough fuel for a significantly higher valuation.
Siemens versus SAP - Which tech giant has the better cards?
Investing in growth stocks on a larger scale focuses attention on the two DAX heavyweights, SAP and Siemens. Both have suffered a sharp drop since the start of the Ukraine crisis. The Siemens shares have fallen by a good 20%. The shares of SAP, the Walldorf-based software company, had already seen their sharp 30% decline at the beginning of the year. Since the outbreak of the crisis, there have been signs of a slight recovery.
Analytically, the experts at Siemens expect sales to increase by just under 10% in the cross-section, and EBIT is expected to rise by more than 30%. However, it had already climbed by 32% in the previous year. It is safe to assume that the consequences of the war and the enormous increase in the cost of raw materials and logistics services have not yet been taken into account. If this were still the consensus, the P/E ratio for the current year would be a manageable 14.8, with a lush dividend yield of 3.4%. If the share price does not fall below the critical support at around EUR 115, Siemens has the potential to return to the upper end at EUR 135. Of the 14 analyst firms surveyed, only Barclays rates the stock as "underweight," while all others recommend "buy.
SAP had delivered a major growth disappointment at the end of 2020. The share price plunged by 40% to EUR 92, and the subsequent recovery also ended at EUR 128. Currently, the share is at its technical stop line at just above EUR 100. In the business with Russia, the expansion in the cloud area will be discontinued, but the maintenance contracts from the installed ERP systems will continue to be fulfilled. The group does not make public how big the business in Russia is. The "Integrated Report of 2019" indicates that the Russian subsidiary represents about half a billion euros in revenue. According to earlier information, customers include the airline Aeroflot and the credit institution Sberbank. SAP is currently valued at 4 times revenue, which is historically low. Cloud, data security and cybercrime should continue to provide the Walldorf-based group with many years of growth after its 50th birthday. Of 14 available analyses, they all sound a Buy or Overweight! Conclusion: Pick up between EUR 95 and EUR 105!
In the current crisis around Ukraine, good advice is expensive. The fact remains that companies from the medical equipment and service sector are needed more rather than less. Software also remains an ongoing topic in the course of advancing digitalization. Perimeter Medical Imaging should see a leap in growth in the current year.
Conflict of interest
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