Why the PPE Industry Is Ripe for Disruption

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The markets have been keeping close tabs on the pandemic as several companies make progress with vaccines and COVID cases spike in the United States and globally.

The Latest COVID Updates

  • New pandemic restrictions have been announced for a number of states including New York, Michigan, New Jersey, Washington and Wisconsin.
  • Growing restrictions continue to hamper U.S. economic growth, vaccine-related reports from several pharmaceutical companies have investors feeling confident. 
  • At least 10 different coronavirus vaccine candidates are currently in late-stage studies, according to the  According to the Regulatory Affairs Professionals Society.
  • Moderna  (MRNA) - Get Report and Pfizer  (PFE) - Get Report announcing new details about its vaccines. Moderna reporting a 94.5% efficacy rate. Those results topped the 90% threshold reported by Pfizer just last week.

So what do these game-changing developments mean for the Personal Protective Equipment, or PPE,  market? 

TheStreet is partnering with 02 Industries to answer those questions and more in our special report Why PPE is Ripe for Disruption.

A little bit about our experts:

  • Ashly Knox, Chief Marketing Officer for O2 Industries, a leading respirator maker
  • Chris Versace is a Real Money contributor and Chief Investment Officer at Tematica Research
  • Katherine Ross, TheStreet’s correspondent and host for TheStreet Live with Jim Cramer,  takes a look at why the PPE market is ripe for disruption and what investors should be watching.

 COVID & PPE: Sectors Driving Market Disruption 

“Technology is clearly a huge disruptor,” said Chris Versace. There’s a number of things that are happening now. Wearables, the debut of 5G networks, augmented reality, virtual reality, there's just a tremendous amount.” When we see disruption happening in this area it is in the advancement of technology.. to me, that's some of the uncovered fruit that is really worth exploring.”

The area of regulations is one where we should expect some disruption as well. In particular, when it comes to making respirators and other materials, specifically around health care and other industrial use cases, according to Ashley Knox.

“I think it is right for disruption in the sense that these standards are outdated and they make it a very high barrier to entry for people into these markets.” Not to mention that some of the shortages we saw in respirators and PPE, in general, had to do with the regulations that go with these markets. “Those regulations haven't been updated in decades,” Knox said.

COVID: Winners and Losers in the PPE Space

While clearly, the PPE industry is ripe for disruption, there is still so much uncertainty ahead making it difficult for investors to sort out winners and losers.

“As an investor, you really want to focus on those companies that are more pure plays on the PPE market,” Knox said. “It could be O2, it could be other companies like Lakeland Industries or a number of others that are out there.”

Katherine Ross told the panel that from her reporting, 3M  (MMM) - Get Report, who is producing the much needed N95 mask, is definitely still one of the major leaders and major players in PPE. Lydall  (LDL) - Get Report is a company a little bit less known but back in June they received a $13.5 million contract from the US Department of Defense to ensure the production of face masks on American soil.” Major players to smaller names all competing in this fast-growing space.

Vaccine & Market Outlook 

Our panel agreed with a Covid timeline that Katherine Ross, TheStreet's Business of COVID reporter, explained that if we can get a smooth transition from the Trump administration to the president-elect Biden's administration, we could potentially get a vaccine rolled out to the masses for the first dose of two-dose vaccines in about March 2020. “ So perhaps maybe late summer, early fall, would be my estimation of when you'd have about 60% of the population getting that vaccine if we all line-up,” she said. 

“And so that would be based on my reporting when I'd start to expect people to feel more comfortable with a return to normal," Ross continued.

When will investors begin to feel back to normal? Chris Versace added that “the stock market is by nature of the forward-looking animal. And it tends to look forward about six months, which probably means the market will start baking in a real pronounced recovery sometime late in the second quarter of 2021 and more likely the summer. That's probably when we'll see companies start to really, not only face easy comparisons year over year compared to this year, but those are the odds that's probably the time where we see companies really confidently start to boost their EPS outlooks for the second half of 2021 and potentially, give positive guidance for 2022 as well.”

Stay with TheStreet.com for the latest on the coronavirus and its impact on global markets.