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The 2014 All-Japan Research Team: Health Care & Pharmaceuticals, No. 1: Hidekatsu Watanabe

Vaulting from third place to earn his first top finish on this list is Hidekatsu Watanabe, who similarly leaps from runner-up to second place in OTC & Small Companies.

Hidekatsu Watanabe
Mizuho Securities Group
First-Place Appearances: 1

Total Appearances: 5

Analyst Debut: 2006

Vaulting from third place to earn his first top finish on this list is Hidekatsu Watanabe, who similarly leaps from runner-up to second place in OTC & Small Companies. The 47-year-old analyst joined Mizuho Securities Group in 2000 from Nomura Securities Co., where he tracked textiles and chemicals companies before switching to his current coverage in 1995. He holds a bachelor's degree in economic policy and public choice theory from Tokyo's Keio University. Watanabe's "deep insight and knowledge of the Japanese health care system" are noteworthy, one portfolio manager insists. Even as growth in the nation's economy has slowed, the researcher notes, its health care shares have continued to perform well, backed by strong earnings. Health care stocks jumped 41.2 percent over the two years through mid-March, besting the broad market by 5.6 percentage points. "The principal drivers for growth have been an aging society, an increase in demand in line with the rebuilding of hospitals and an expansion in exports," he explains. That strong performance will continue throughout the sector this year, he forecasts, although the escalation of demand for medical equipment that was driven in 2013 by hospital rebuilding and equipment updating will moderate this year. Looking ahead, Watanabe is bullish on Tokyo-based Olympus, a manufacturer of optics and reprography products, forecasting stable growth and strong international competitiveness in its medical business, particularly in endoscope operations. He deems ¥3,700 a fair valuation for the shares, which represents a 15.1 percent premium to their mid-March price. Other current favorites include Kobe-based diagnostic equipment manufacturer Sysmex Corp., owing to its "potential for strong, stable growth on the back of the company's creative business model," the researcher says, and Aichi's Asahi Intecc Co., which "shows strong competitiveness and growth potential as a high-quality medical materials manufacturer specializing in cardiovascular niche markets."

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