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How Is IHI Performing Compared to the Broader Market?

Peter Neil

How Is IHI Trading Compared to the Broader Market?

IHI insight

The global markets fell on April 28, 2016, as the Bank of Japan kept its rates unchanged to much surprise. The US markets followed suit, and the Dow Jones Industrial Average closed at a fall of 1.2%.

The SPDR S&P 500 ETF (SPY) fell by 0.9% on the day. The iShares US Medical Devices ETF (IHI) fell by 0.8%, outperforming the broader markets.

The above chart indicates the prices, moving averages, and returns of the iShares US Medical Devices ETF, the SPDR S&P 500 ETF, and a few holdings of IHI as of April 28, 2016.

Stocks that fell the most within IHI

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The stocks that fell the most within IHI were Invacare (IVC), Hologic (HOLX), and Abbott Laboratories (ABT). IVC, HOLX, and ABT fell by 19%, 10.3%, and 7.8%, respectively.

Invacare fell as it announced its 1Q16 results, which were lower than analysts’ expectations. As per the company’s press release, the following were its highlights in 1Q16:

  • “Excluding the divested rentals businesses, constant currency net sales decreased 4.8% and reported net sales decreased 10.9% compared to the first quarter last year.”

  • “Adjusted net loss per share from continuing operations was $0.25 compared to adjusted net loss per share of $0.21 in the first quarter last year. GAAP [generally accepted accounting principles] loss per share from continuing operations was $0.27 compared to a loss per share of $0.23 in the first quarter last year.”

  • “Debt outstanding as of March 31, 2016, was $197.9 million compared to $48.3 million as of December 31, 2015. The increase in debt outstanding is the result of the issuance of $150.0 million in convertible debt during the first quarter of 2016.”

Invacare closed at $11.01 and was trading below its 20-day moving average. Year-to-date (or YTD), Invacare has fallen by 36.7%. Nearly 2.2 million of its shares were traded on April 28, compared to its three-month average trading volume of 520,000 shares per day.

Invacare has a book value of $14.21 per share. With its current price, the stock is trading at a price-to-book value of ~0.77x. Invacare has a weight of ~0.2% in IHI’s portfolio.

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