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A Closer Look at IHI’s Mid-Cap Performances

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Reviewing IHI’s mid-caps

On May 12, 2016, the mid-capitalization stocks of the iShares U.S Medical Devices ETF (IHI) fell by 0.7% and underperformed the SPDR S&P 500 ETF (SPY), which remained stagnant.

IHI holds 16 mid-cap stocks in its portfolio. Among them, seven stocks rose while nine stocks fell from their previous closing prices. From the start of May until May 12, 2016, IHI’s mid-cap stocks rose by 0.1%, reflecting SPY’s performance.

The above graph reflects the performances of SPY, IHI, and IHI’s mid-cap stocks. On a year-to-date (or YTD) basis, IHI’s mid-cap stocks rose by a collective 2%. Mid-cap stocks have a weight of 18.9% in IHI’s portfolio.

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Varian rose marginally

Varian Medical Systems (VAR) rose by 0.4% on May 12, 2016. In a press release, Varian Medical announced that it had “been selected by The Christie NHS Foundation Trust to provide Eclipse treatment planning software for the proton center currently under construction at the Manchester hospital.”

The release continued, “Varian is already supplying treatment equipment for the two UK national proton centers being constructed at The Christie and at University College Hospital in London.”

VAR’s stock closed at $82.26 and was trading below its 20-day moving average price of $83.2. The trading volume of the stock was higher, at ~671,000 shares compared to its five-day average trading volume of 537,000. YTD, the stock has risen by 1.8%.

On May 12, 2016, the stock was trading at a 2016 forward price-to-earnings mutliple of 18.0x. Some of its peers such as Hill-Rom Holdings (HRC) and Cantel Medical (CMN) were trading at 2016 forward price-to-earnings multiples of 14.6x and 43.8x, respectively.

Varian Medical has a book value of $17.68 per share. At its current price, the stock is trading at a price-to-book value of ~4.7x. Varian has a weight of ~1.8% in IHI’s portfolio.

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