Analyst Note| Debbie S. Wang |
While Advanced Medical Solutions has yet to release detailed half-year results, the preliminary data on favorable volume and operating leverage trends in the first half of 2021 is consistent with our assumptions for moderate resumption of surgical procedures, and we’re leaving our fair value estimate unchanged. We recognize the rise of the delta variant injects a new level of uncertainty that could depress surgical volume in the remainder of this year. However, we expect the impact of this latest wave will likely be highly localized. Either way, we do not think these near-term pandemic-driven fluctuations hold implications for underlying demand for the types of surgical procedures that utilize AMS’ products. Further, we’re pleased to see the firm continue to work on navigating the clinical trials and regulatory pathway for its more novel branded products. We view these differentiated products in AMS’ portfolio as key contributors to the firm’s narrow economic moat.