What Happened?

A number of stocks fell in the afternoon session after the U.S. Commerce Department initiated a national security investigation into medical equipment and devices, raising concerns about potential tariffs. 

The probe, conducted under Section 232 of the Trade Expansion Act, examines whether imports of items like syringes, infusion pumps, and surgical instruments pose a national security risk. Such investigations can pave the way for new import duties, creating a significant overhang for the sector. The goal of potential tariffs would be to boost domestic manufacturing by increasing the cost of foreign goods. This development has introduced new uncertainty for the industry, leading to broad-based declines in the stocks of major manufacturers, including Baxter International and GE HealthCare, as investors weigh the potential impact on supply chains and costs.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Merit Medical Systems (NASDAQ: MMSI) fell 3.8%. Is now the time to buy Merit Medical Systems? Access our full analysis report here, it’s free.
• ICU Medical (NASDAQ: ICUI) fell 7.4%. Is now the time to buy ICU Medical? Access our full analysis report here, it’s free.
• Penumbra (NYSE: PEN) fell 2.5%. Is now the time to buy Penumbra? Access our full analysis report here, it’s free.

Zooming In On ICU Medical (ICUI)

ICU Medical’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 20 days ago when the stock gained 1.5% on the news that the company presented at the Wells Fargo 20th Annual Healthcare Conference, highlighting its strategic growth initiatives and robust performance. During the conference, Chairman and CEO Vivek Jain outlined the company's focus on mid-single-digit growth in its consumables and IV systems segments. A key element of its strategy is a joint venture with Otsuka Pharmaceutical, which aims to improve IV solutions through innovation and greater cost efficiency. Adding to investor confidence, Jain's recent stock buyback was noted as a signal of his belief in the company's earnings potential. Despite some concerns about slower growth in certain areas, the overall message from management was one of confidence in achieving financial targets and delivering shareholder value.

ICU Medical is down 25.9% since the beginning of the year, and at $117.05 per share, it is trading 36.3% below its 52-week high of $183.83 from October 2024. Investors who bought $1,000 worth of ICU Medical’s shares 5 years ago would now be looking at an investment worth $627.69.

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