2 medical tech ASX shares Morgans loves right now

Growth stocks have fallen out of favour with investors, but one investment house is keeping the faith in this pair of health device makers.

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Medical and biotechnology ASX shares have suffered greatly the past few months as the prospect of rising interest rates scares people off future-dependent sectors.

But the team at Morgans believes there are still a couple of medical tech stocks that are big enough and profitable enough to be worth buying at the current discount.

Let's take a look at the pair, as recommended by analyst Andrew Tang:

'Maintains a dominant position'

The Cochlear Limited (ASX: COH) share price has largely gone sideways over the past 12 months, gaining just 2.3%. Year-to-date is similar, showing a 1.8% rise.

The hearing device company took a hit from the COVID-19 pandemic, which saw fewer patients seeking treatments for non-respiratory issues.

There were also investors who were not fans of Cochlear's recent acquisition of Oticon Medical.

But, for Tang, there is no reason why Cochlear won't recover to its pre-COVID glory.

"Cochlear maintains a dominant position in the implantable hearing solutions segment," he wrote in Morgans Best Ideas for May.

"While we continue to believe a full recovery from COVID-based disruptions still has time to play out, improving demand and strong pipeline — coupled with management's increasing confidence — suggests an improving earnings profile."

According to CMC Markets, eight out of 20 analysts recommend Cochlear shares as a buy, while nine rate it as a hold.

Short-term pain for long-term gains

Sleep breathing device maker Resmed CDI (ASX: RMD) has recently seen its stocks wade through far choppier waters than Cochlear.

The volatility is seen in how the share price has lost more than 21% for the year but gained 13% over the past 12 months.

Tang believes the rollercoaster ride will continue for a while yet.

"We believe the next few quarters will likely be volatile, as COVID-related demand for ventilators continues to slow and core sleep apnoea volumes gradually lift."

But the Morgans team still has plenty of conviction in Resmed over the long term.

"Nothing changes our medium/longer term view that the company remains well-placed as it builds a unique, patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain."

Goldman Sachs analysts agree with Morgans, rating Resmed as a buy with a price target of $33.70.

"The broker believes ResMed is still in a stronger position today than 12 months ago and does not believe the near term challenges should be overcapitalised," reported The Motley Fool's James Mickleboro last week.

Indeed, 13 out of 23 analysts surveyed in CMC Markets rate the stock as a "strong buy", with another three labelling it a "moderate buy".

Motley Fool contributor Tony Yoo has positions in Cochlear Ltd. and ResMed Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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