Analysts See Potential for Health Tech Stocks to Bottom Out

There might be a bottom for healthcare tech stocks, Bloomberg reported Tuesday (March 22), citing the massive selloff in tech firms.

The current geopolitical crises and rising interests are also spilling into healthcare, which the report said helped send the Global X Telemedicine & Digital Health exchange traded fund (ETF) to a new low as of early last week — though it’s rallied 14% since then.

Glen Santangelo, analyst with Jefferies Group, told Bloomberg there is a 55% discount in the broad tech sector, which was at 32% before the pandemic — potentially signaling good things for the future.

Santangelo said it’s possible stocks will be rewarded if they’re focused on turning a profit over growth, and will outperform eventually.

He added that he’s been avoiding companies that have come to the market through special purpose acquisition company (SPAC) mergers, giving an example of Babylon Holdings, which has fallen over 50% since its merger in 2021. He said investors had been shunning the companies on limited disclosures.

Meanwhile, Citi analyst Daniel Grosslight said investors should focus on “pockets of profitability,” offering Teladoc as an example of a preferred stock.

Teladoc used to be a pandemic darling, but has fallen over 75% since its highest point in February 2021. Wall Street has been divided on it — 19 have recommended buying the stock, while 12 were saying to hold it, per the report.

In February, PYMNTS wrote about the news that Amazon might be interested in buying Peloton, which caused the stock to jump 30% in after-hours trading.

Read more: Peloton and the Amazon Effect on Fitness

The pressures of the economy reopening have compounded on reports that Peloton was cutting production of bikes and treadmills due to less demand, and numerous “unfortunate” PR incidents involving TV scenes with characters dying on Peloton products.

Peloton’s market cap is roughly $8 billion, which is around what it was when it went public in 2019.