Stifel launched coverage on the life sciences and diagnostics sector, saying it sees the collective end market environment as intact heading into 2020, driven by strong spending from drug development companies and clinical labs.
However, the industrial and applied market spending is down, writes analyst Daniel Arias, and pockets of regional softness have emerged within various customer segments.
“While we see good opportunities for upside on certain stocks into the new year, we tread cautiously overall on the tools group as valuation creeps back up toward peak levels,” he added.
On the diagnostics side, Mr. Arias said he is bullish on key aspects of the oncology testing market, which has a few small/mid-cap companies – NanoString Technologies (NASDAQ:NSTG) and Exact Sciences (NASDAQ: EXAS) – looking attractive.
Mr. Arias’ top picks, which have been added to Stifel’s Select List, are Repligen (NASDAQ:RGEN) and Thermo Fisher Scientific (NYSE:TMO) while his least preferred stock is Waters (NYSE:WAT).