In this article, we will take a look at some of the best medical device stocks for 2021. To skip our detailed analysis on the medical device industry, the impact of the COVID-19 pandemic on the industry, and its future outlook, click to see the 5 Medical Device Stocks for 2021.
The COVID-19 pandemic certainly came out of nowhere and ended up ruining the prospects of many industries across the globe. The airline sector is one example, where up to 46 million jobs were at risk in the previous year because of the spillover effect from the coronavirus pandemic. Most of the other industries and sectors went through the same thing, but during these unprecedented and trying times, the healthcare and medical device industries actually grew beyond our expectations. For example, an industry report released by Fortune Business Insights mentioned that in 2020, the global market size for the medical devices industry was valued at $432.23 billion. This value is expected to grow at a CAGR of 5.4% from 2021 to 2028 to become $657.98 billion.
Despite the above, the medical device sector was also slightly impacted by the outbreak of the pandemic as well. For instance, the pandemic resulted in supply chain disruptions, particularly in 2020, making it harder to distribute medical devices, and since medical procedures became classified into “elective” and “essential” procedures, many of the electives were postponed or canceled entirely, resulting in the industry taking a hit. This hit did take the form of a 3.7% decline in the global medical device market in 2020 but has since become a thing of the past, especially in light of COVID-19 vaccinations becoming accessible and widely distributed across the globe.
Because of the coronavirus pandemic, companies like Becton, Dickinson and Company (NYSE: BDX) are beginning to take the lead in the medical devices sector due to their rapid manufacture and distribution of syringes and needles for the administration of COVID-19 vaccinations across the globe. The global market for disposable syringes alone is due to reach $12.13 billion by 2028, increasing at a CAGR of 5.3%, according to a report by Research and Markets. This growth is unsurprising given statements by the WHO, which claim that around 16 billion injections are administered worldwide in a year, a number likely to ridiculously increase during a pandemic when global vaccinations are becoming more commonplace. For instance, Bloomberg reported on June 23rd that so far, over 2.71 billion vaccination shots have been administered worldwide this year, at a rate of roughly 41.7 million doses in one day. About 319 million of those doses were administered in the US alone.
More than syringes and needles for vaccinations, a report by Lucintel last year also shed light on other sectors in the medical device industry that can be expected to gain prominence and grow exponentially by 2025. These include cardiovascular devices, the use of which is growing alongside the growth of the global geriatric population, and surgical devices. The use of the latter is expected to grow the most in the forecast period till 2025 due to increasing numbers of surgical procedures and growth in the number of people afflicted by chronic diseases across the globe. For instance, a WHO report on the global volume of surgery in 192 WHO member states revealed that about 234.2 million surgical procedures occur across the globe per year.
Hence, the growth of the medical device industry in the past couple of years and the potential of the industry’s growth in the future cannot be underestimated. This explosive growth in the industry is helping medical device stocks like Johnson & Johnson (NYSE: JNJ), Abbott Laboratories (NYSE: ABT), Stryker Corporation (NYSE: SYK), Baxter International Inc. (NYSE: BAX), Boston Scientific Corporation (NYSE: BSX) and Bio-Rad Laboratories, Inc. (NYSE: BIO).
Major companies like Amazon.com, Inc. (NASDAQ: AMZN) are also moving into the medical device industry. For instance, Amazon.com, Inc. has launched its own medical device brand called Choice. In addition, Facebook, Inc. (NASDAQ: FB) has also made an entry into the healthcare sector alongside Alphabet Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL).
Alphabet Inc. (NASDAQ: GOOG) operates in the healthcare sector through their Life Sciences Unit, now known as Verily, developing diabetes management tools and bioelectronic devices for rheumatoid arthritis treatments. On the other hand, Apple Inc. (NASDAQ: AAPL) is developing technology like ResearchKit and CareKit to create FDA-approved health applications for doctors and patients alike. Facebook, Inc. (NASDAQ: FB) has developed its Preventive Health system, which sends users check-up reminders and suggestions for where they can go to get cancer screenings and medical check-ups.
All in all, we can see many major companies making moves in the healthcare and medical device industries, making them some of the most profitable options for investors in 2021. Hence, we have compiled a list of the best medical device stocks for 2021, based on hedge fund popularity and gains in the past 6 months and year to date.
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Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s now look at the 10 medicals stocks for 2021.
Medical Device Stocks for 2021
10. Abiomed, Inc. (NASDAQ: ABMD)
Number of Hedge Fund Holders: 26
Abiomed, Inc. (NASDAQ: ABMD) is a company working to research and develop medical devices for sale. Their devices assist or replace the pumping function of a failing heart and provide care to heart failure patients. The company ranks 10th on our list of medical device stocks for 2021.
On June 1st, Abiomed, Inc. (NASDAQ: ABMD) acquired preCARDIA, a company focused on developing a proprietary catheter and controller for patients suffering from acute decompensated heart failure. The preCARDIA system has a Breakthrough Device Designation from the FDA. For the first quarter of 2021, Abiomed, Inc. (NASDAQ: ABMD) had EPS valued at $0.58 versus estimates of $0.32 and managed to bring in $164.85 million in revenue for the quarter, representing a 0.79% growth year over year. The company also has a gross profit margin of 80.9% and has gained 7.61% in the past 6 months and 3.3% year to date.
By the end of the first quarter of 2021, 26 hedge funds out of the 866 tracked by Insider Monkey held stakes in Abiomed, Inc. (NASDAQ: ABMD), with a total stake value of roughly $1.003 billion. This is compared to 23 hedge fund holders in the previous quarter, with stakes valued at about $9.99 billion. Like Johnson & Johnson (NYSE: JNJ), Abbott Laboratories (NYSE: ABT), Stryker Corporation (NYSE: SYK), Baxter International Inc. (NYSE: BAX), Boston Scientific Corporation (NYSE: BSX), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL), Abiomed, Inc. (NASDAQ: ABMD) is a good stock to invest in.
Touchstone Sands Capital Institutional Growth Fund recently released its first-quarter 2021 investor letter where they mentioned Abiomed, Inc. (NASDAQ: ABMD). Here’s what they said:
“The Fund sold Abiomed in March to make room for a new business. We continue to have confidence that Abiomed’s Impella device can become more widely adopted over time for severe cardiac failure. However, with the recent setbacks, this will likely take longer than originally expected, and will be more reliant on new clinical data. Given the market dislocations caused by the coronavirus outbreak, we believe the business’s opportunity cost is too high. We always viewed Abiomed as an emerging franchise with a wide cone of outcomes, and managed this risk in the Fund through a small portfolio weight.”
9. Edwards Lifesciences Corporation (NYSE: EW)
Number of Hedge Fund Holders: 36
Edwards Lifesciences Corporation (NYSE: EW) is a medical device company providing technology for structural heart disease and critical care and surgical monitoring. It operates in the US, Europe, Japan, and internationally. The company’s products include the transcatheter heart valve replacement device for minimally invasive replacements of heart valves. It ranks 9th on our list of medical device stocks for 2021.
On June 1st, Edwards Lifesciences Corporation (NYSE: EW) received clearance from the FDA for its hypotension prediction index software. In its first-quarter report, the company’s EPS was valued at $0.54 versus estimates of $0.47, and it brought in revenue totaling $1.22 billion. Edwards Lifesciences Corporation (NYSE: EW) has a gross profit margin of 75.22% and has gained 18.4% in the past 6 months and 17.54% year to date. The stock has a consensus Buy rating.
By the end of the first quarter of 2021, 36 hedge funds out of the 866 tracked by Insider Monkey held stakes in Edwards Lifesciences Corporation (NYSE: EW), with a total stake value of roughly $1.46 billion. This is compared to 38 hedge fund holders in the previous quarter, with stakes valued at about $1.24 billion. Like Johnson & Johnson (NYSE: JNJ), Abbott Laboratories (NYSE: ABT), Stryker Corporation (NYSE: SYK), Baxter International Inc. (NYSE: BAX), Boston Scientific Corporation (NYSE: BSX), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL), Edwards Lifesciences Corporation (NYSE: EW) is a good stock to invest in.
Wedgewood Partners, an investment management firm, mentioned Edwards Lifesciences Corporation (NYSE: EW) in their first-quarter 2021 investor letter. Here’s what they said:
“Edwards Lifesciences business continues to generate high returns while taking market share, even as it recovers from a COVID-19-induced slowdown in medical procedures. The Company’s flagship transcatheter aortic replacement valve (TAVR) franchise reported flat growth; however, this was on very difficult year ago comparisons, which saw over 40% growth in the U.S. The Company should be able to post mid-to-high teen TAVR growth this year as clinics work through a backlog of patients, and in addition, one of Edwards’ competitors recently exited the market. While we reduced our weightings to fund incremental buys elsewhere in the portfolio, we continue to own Edwards as a top holding.”
8. Baxter International Inc. (NYSE: BAX)
Number of Hedge Fund Holders: 40
Baxter International Inc. (NYSE: BAX) is a developer of healthcare products worldwide. The company offers organ support therapies alongside biological products and medical devices. It ranks 8th on our list of medical device stocks for 2021.
Baxter International Inc. (NYSE: BAX) declared a $0.28 per share quarterly dividend this May with a forward yield of 1.29%. In its first-quarter report, its EPS was valued at $0.76 versus estimates of $0.65, and its revenue was valued at $2.95 billion, representing a 2.52% growth year over year. The stock has gained 3.28% in the past 6 months and 1.51% year to date.
By the end of the first quarter of 2021, 40 hedge funds out of the 866 tracked by Insider Monkey held stakes in Baxter International Inc. (NYSE: BAX), with a total stake value of roughly $3.36 billion. This is compared to 42 hedge fund holders in the previous quarter, with stakes valued at about $2.8 billion. Like Johnson & Johnson (NYSE: JNJ), Abbott Laboratories (NYSE: ABT), Stryker Corporation (NYSE: SYK), Boston Scientific Corporation (NYSE: BSX), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL), Baxter International Inc. (NYSE: BAX) is a good stock to invest in.
7. Boston Scientific Corporation (NYSE: BSX)
Number of Hedge Fund Holders: 44
Boston Scientific Corporation (NYSE: BSX) is a manufacturer of medical devices for interventional medical specialties across the globe. The company’s devices can diagnose and treat gastrointestinal and pulmonary conditions and urological and pelvic conditions, among others. It ranks 7th on our list of medical device stocks for 2021.
Artisan Partners Limited Partnership, a high value-added investment management firm, mentioned Boston Scientific Corporation (NYSE: BSX) in their fourth-quarter 2020 investor letter. Here’s what they said:
“Among our bottom contributors in Q4 was Boston Scientific. Shares of Boston Scientific were pressured in Q4 alongside the cancellation of its transcatheter aortic valve product Lotus Edge. We acknowledge the modest disappointment, but we believe it will be slightly accretive to earnings in the near term. Longer term, we believe the company’s investments over the past five years in higher growth categories—structural heart, peripheral interventions, international oncology, atrial fibrillation in particular—position it well to improve its margins and grow revenue at a rate on the higher end of its peer group. Given this backdrop and the Lotus news more than accounted for in the share price, we added to our position at an attractive valuation.”
6. Bio-Rad Laboratories, Inc. (NYSE: BIO)
Number of Hedge Fund Holders: 44
Bio-Rad Laboratories, Inc. (NYSE: BIO) is a medical device company that works in life science research and manufactures clinical diagnostic products for sale in the US, Europe, Asia, Canada, and Latin America. The company develops a range of reagents, apparatus, and laboratory instruments for research and biopharmaceutical production processes. It ranks 6th on our list of medical device stocks for 2021.
For the first quarter of 2021, Bio-Rad Laboratories, Inc. (NYSE: BIO) has an EPS valued at $5.21 versus estimates of $2.94 and managed to rake in $726.8 million in revenue representing a 15.95% growth year over year. The stock has gained 8.77% in the past 6 months and 8.62% year to date. Bio-Rad Laboratories, Inc. (NYSE: BIO) has a consensus rating of Buy.
By the end of the first quarter of 2021, 44 hedge funds out of the 866 tracked by Insider Monkey held stakes in Bio-Rad Laboratories, Inc. (NYSE: BIO), with a total stake value of roughly $890 million. This is compared to 42 hedge fund holders in the previous quarter, with stakes valued at about $1.12 billion. Like Johnson & Johnson (NYSE: JNJ), Abbott Laboratories (NYSE: ABT), Stryker Corporation (NYSE: SYK), Baxter International Inc. (NYSE: BAX), Boston Scientific Corporation (NYSE: BSX), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL), Bio-Rad Laboratories, Inc. (NYSE: BIO) is a good stock to invest in.
Click to continue reading and see the 5 Medical Device Stocks for 2021.
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Disclosure: None. 10 Medical Device Stocks for 2021 is originally published on Insider Monkey.
