Medical Equipment Industry: Apr-Jun earnings preview: A test for sustained inflows

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Medical Equipment Industry

Apr–Jun earnings preview: A test for

sustained inflows

Price Objective Change

Turn gradually more bullish on quality names into results

The medtech sector has continued to outperform, benefiting from broader investor

interest amid a reversal of the AI-driven rally. We conclude that investors should

gradually adopt a more bullish stance on quality names into Apr–Jun results, given that

(1) yen depreciation should support earnings and (2) a slowdown in the AI rally should

drive fund inflows into sectors with solid earnings. Valuations remain inexpensive from a

medium- to long-term perspective, and while the near-term direction of the AI rally

warrants attention, we believe the sector is likely to trend toward a recovery.

Stock selection into earnings: Recommend Nakanishi

Into Apr–Jun results, we focus on three factors: (1) Apr–Jun results, (2) guidance

revisions, and (3) company-specific catalysts. From these perspectives, we recommend

Nakanishi, as we expect 2Q results to beat consensus and the company to raise its fullyear guidance above consensus, with a potential new product announcement providing

an additional catalyst.

We are also positive on Shimadzu (guidance revision), Sysmex (1Q results), Asahi Intecc

(revision to medium-term guidance), and Terumo (potential share buyback). Conversely,

we expect Olympus to report 1Q results below consensus, while the lack of progress on

its FDA issues could also be viewed negatively. However, the company could announce

measures to improve profitability through business restructuring, and we do not

necessarily recommend shorting the stock into 1Q results from a risk-reward

perspective.

Tariff refund estimates, previews, and estimate revisions

We provide our tariff refund estimates in this report and expect a relatively large

positive impact on Olympus and Nakanishi. Companies are scheduled to report results on

August 6 (Shimadzu, Fujifilm, and PHC Holdings), August 7 (Menicon, Nakanishi, Terumo,

Sysmex, and Olympus), and August 14 (Asahi Intecc). We revise our earnings estimates

for all companies to reflect Apr–Jun results in our FX assumptions. We also revise our

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