Raymond James Thinks Med Tech Investors are Somewhat 'Paralyzed' Ahead Of Q1 Earnings

Raymond James has outlined its expectations for next week when Johnson & Johnson JNJ, Abbott Laboratories ABT, and Intuitive Surgical Inc ISRG will report Q1 FY22 earnings.
Analysts believe that the Med Tech investors have become somewhat 'paralyzed' given the macro/factor-driven concerns.
On the macro, investor attention seems to be focused less on revenue growth and more on supply chain/margin uncertainty, which the Russia-Ukraine conflict has amplified.
"1Q FY22 earnings will give us more clarity on the supply dynamic, but our belief is that the supply chain issues will improve over the coming quarters," analysts tell investors.
Med Tech is (correctly) viewed as a 'growth group,' which has weighed on sentiment as investors have migrated to value-oriented names in 2022.
Analysts suggest that while omicron will impact 1Q revenue, this dynamic should be factored into consensus estimates. However, FX will provide more of a headwind (by an incremental 70-120bp to JNJ/ABT), favorable for the demand profile.
The analysts expect ISRG to have the largest/cleanest beat and believe it has the most interesting set-up.
It expects both JNJ's (FX, Russia/Ukraine exposure) and ABT's (Pediatric-Nutrition recall, FX) print and conference call to be a bit noisier (than ISRG's) given the relative macro exposure.
In summary, the key issues are the pace of the procedure recovery, the impact of COVID-19 in China, the Russia-Ukraine conflict, and supply chain status.

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