RBC warns of tariff impact on Nike, PUMA, and Medical Device stocks

On Thursday, RBC Capital Markets updated its assessment of the impact that the new tariffs, implemented on April 2, will have on stocks within the Luxury & Sporting Goods and Medical (TASE:BLWV) Devices sectors. The analysts found that the repercussions are more severe than initially expected, particularly for sporting goods companies with significant Southeast Asian exposure. The updated RBC US Tariff model now indicates a higher risk for brands like PUMA and Nike (NYSE:NKE) due to their higher US revenue mix, lower gross margins, and country sourcing mix. Conversely, Moncler and LVMH (EPA:LVMH) are seen as less exposed.

The April 2 tariffs introduced additional levies on imports from a range of countries, with China facing an additional 34% tariff on top of the previously announced 20%. Other countries like Vietnam, Cambodia, Thailand, Indonesia, Laos, Switzerland, Europe, and the UK have also seen significant tariff increases. RBC analysts believe that PUMA and Nike are more impacted relative to adidas, given the new tariff structure.

In the luxury segment, Burberry (LON:BRBY) is anticipated to face an elevated tariff impact due to its sourcing mix, while brands such as Swatch are also affected. However, LVMH and Moncler are positioned more favorably due to their production within the US and EU, which shields them from some of the tariff increases.

For the Medical Devices sector, President Trump’s announcement of "universal tariffs," which includes a 10% baseline tariff on all imports to the US, represents an incremental headwind. However, US-based companies like GMED, PEN, TNDM, and ZYXI, or those with exemptions such as OM, are expected to be less affected. InvestingPro analysis shows that leading medical device companies maintain strong financial health, with many showing revenue growth above 25% and maintaining minimal debt-to-equity ratios below 0.05x. For deeper insights into how tariffs affect individual companies, investors can access comprehensive Pro Research Reports covering 1,400+ US stocks. RBC maintains a positive outlook on the sector, citing opportunities to buy on dips and robust underlying fundamentals.

Key takeaways for the Medical Supplies & Devices sector include a recognition that costs will rise unless companies are US-based or exempt. The varying impact of tariffs across different countries will play a crucial role in risk assessment for US imports. Conversations with hospital executives suggest that while there may be some ability to pass on tariffs through higher pricing, this could be challenging in the short term. Companies are still evaluating the risks, and updates are expected during the Q1 earnings season, which may indicate a conservative approach to guidance due to the new tariffs.

In summary, the analysts at RBC Capital Markets see the tariffs as an incremental challenge for covered companies in the Medical Supplies & Devices sector, but one that is likely manageable. They suggest that the situation could present buying opportunities for investors, given the strong sector fundamentals.

In other recent news, Inspire Medical Systems (NYSE:INSP) reported robust fourth-quarter earnings, with revenue meeting previously set expectations and earnings per share (EPS) surpassing consensus estimates by 57%. RBC Capital Markets maintained an Outperform rating with a $260 price target, highlighting the company’s strong financial performance and positive 2025 guidance, which includes anticipated sales of $940-955 million and EPS ranging from $2.10 to $2.20. UBS also reiterated a Buy rating with a $265 target, expressing confidence in Inspire Medical’s growth and the potential for exceeding future earnings expectations despite an ongoing Department of Justice investigation. Truist Securities adjusted its price target to $235 from $250, maintaining a Buy rating, while acknowledging the potential impact of the investigation but suggesting it might present a buying opportunity. Piper Sandler reaffirmed an Overweight rating with a $233 target, focusing on Inspire Medical’s competitive positioning in the ENT market and favorable economic incentives for surgeons. UBS analysts noted that the company’s strong cash position and positive cash flow further support their optimistic outlook. These developments reflect a consensus among analysts that Inspire Medical is well-positioned for continued growth, despite some external challenges.

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