In this article we presented the 10 medical technology stocks to buy. You can skip our detailed discussion on these stocks, and read the 5 Medical Technology Stocks to Buy.
The unprecedented COVID-19 pandemic disrupted the world’s largest industries, including manufacturing, airlines, restaurants, and oil and gas drilling, but the medical technology sector has gone through the roof and has been battling the pandemic’s effects. The pandemic has accelerated the adaptation of innovative healthcare systems. According to a global survey by Deloitte, more consumers are adopting new tracking technologies for health monitoring. Likewise, in April 2020, the number of patients seeking telemedicine consultation grew to 28%, up from 19% the previous year. Based on Deloitte’s analysis, healthcare spending is expected to grow at a compound annual growth rate of 3.9% between 2020 and 2024.
The Advancement of AI-powered Medical Technology
Samsung Group’s biopharmaceutical segment Samsung Biologics Co., Ltd. developed an AI-powered diagnostic software for analyzing breast lesions using ultrasound images, S-Detect. A 2020 study led by radiology professor Tommaso Bartolotta of the University of Palermo in Italy found that S-Detect can help with the overall diagnosis of breast lesions to varying degrees.
Meanwhile, Israel-based tech start-up Aidoc received FDA approval in 2020 to use its cutting-edge AI-driven radiology solution to assist radiologists in detecting abrupt pulmonary embolism, as well as Aidoc’s five other FDA-approved tools for diagnosing the brain, neck, chest, and abdominal imaging.
On the other hand, Indianapolis-based health insurer Anthem, Inc. (NYSE: ANTM) launched a mobile app, Sidney Care, that serves over 110 million clients through their affiliated companies. The AI-powered symptom checker, allows Anthem, Inc.’s (NYSE: ANTM) clients to access personalized health information as well as virtual health services. Anthem, Inc.’s (NYSE: ANTM) has gained 42% over the past twelve months.
Why Invest in Medical Technology Stocks?
According to market analysts, medical technology stocks are expected to benefit from the aging U.S. population and device manufacturers’ innovation. In the past five years, institutional investors have poured more than $80 billion into health technology, according to a healthcare industry report by McKinsey. Medical technology is one of the divisions of the healthcare industry, which is a fast-growing industry with global spending of $8.3 trillion in 2018, accounting for 10% of global GDP.
Medical companies like Abbott Laboratories (NYSE: ABT), Becton, Dickinson and Company (NYSE: BDX), and Danaher Corporation (NYSE: DHR) have seen an increase in revenue sales given the demand for COVID-19 diagnostic kits. In the first quarter of 2021, the global COVID-19 testing-related sales of Abbott Laboratories (NYSE: ABT) totaled $2.2 billion. The company’s overall revenue in the first quarter came in at $10.5 billion, up 35.3% year over year. Year to date, Abbott Laboratories (NYSE: ABT) has gained 8% and shares increased 7% in the last month.
Similarly, New Jersey-based medical technology company Becton, Dickinson and Company (NYSE: BDX) has benefited from the pandemic. In February, Becton, Dickinson and Company (NYSE: BDX) gained FDA approval in February for a molecular test that identifies COVID-19 and flu viruses and provides results in 2 to 3 hours. Furthermore, Becton, Dickinson and Company (NYSE: BDX) secured pandemic orders totaling 2 billion injectable devices in June to boost global COVID-19 vaccination operations. The company’s second-quarter revenue was $4.9 billion, up 15.4% year over year. The stock has gained 4% in the past month.
Washington-based medical company Danaher Corporation (NYSE: DHR) saw a revenue increase of 36.5% year over year to $7. billion as a result of its contributions to Covid-19 vaccines, medicines, and diagnostic tests. The stock jumped 3.27% after the Q2 results announcement. The stock has gained 45% in the last twelve months. Shares of Danaher Corporation (NYSE: DHR) also increased 30% year to date.
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Let’s now look at the 10 medical technology stocks to buy. The stocks on our list were picked based on their fundamentals and prospects for growth based on key business characteristics. We also took into account analysts’ ratings and hedge fund sentiment to pick out the stocks most popular among the hedge funds tracked by Insider Monkey. These medical technology stocks have been rated in order of the number of hedge fund holders from the lowest to the highest.
Medical Technology Stocks to Buy
10. Edwards Lifesciences Corporation (NYSE: EW)
Number of Hedge Fund Holders: 36
We start our list of the 10 medical technology stocks to buy with Edwards Lifesciences Corporation (NYSE: EW). The California-based healthcare company sells vascular catheters, hemodynamic monitoring systems, and critical care technologies, and surgical instruments used in minimally invasive therapies.
In May, Barclays analyst Travis Steed initiated coverage of Edwards Lifesciences Corporation (NYSE: EW) with an Overweight rating and a price target of $110 per share. Shares of Edwards Lifesciences Corporation (NYSE: EW) jumped 2% in the last month following FDA approval for its hypotension prediction index software.
The company has a market cap of $66 billion. In the first quarter of 2021, Edwards Lifesciences Corporation (NYSE: EW) had an EPS of $0.54, beating estimates by $0.07. The company’s revenue in the first quarter came in at $1.2 billion, an increase of 8% year over year. The stock has returned 37% to investors over the past twelve months and 17% year to date.
At the end of the first quarter of 2021, 36 hedge funds from our database held stakes in Edwards Lifesciences Corporation (NYSE: EW). The total value of these positions amounted to approximately $1.46 billion. Comparatively, there were 38 funds with roughly $1.24 billion worth of Edwards Lifesciences Corporation (NYSE: EW) shares at the end of 2020
Just like Abbott Laboratories (NYSE: ABT), Becton, Dickinson and Company (NYSE: BDX), and Danaher Corporation (NYSE: DHR), Edwards Lifesciences Corporation (NYSE: EW) is one of the best medical technology stocks to buy.
In its Q1 2021 investor letter, Wedgewood Partners mentioned Edwards Lifesciences Corporation (NYSE: EW) and shared their insights on the company. Here is what the fund 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.”
9. Baxter International Inc. (NYSE: BAX)
Number of Hedge Fund Holders: 40
Medical specialty products manufacturer Baxter International Inc. (NYSE: BAX) ranks 9th on the list of 10 medical technology stocks to buy. The Illinois-based healthcare company offers everything from hemodialysis services, parenteral nutrition therapies, medical devices, and surgical products.
In May, Baxter International Inc. (NYSE: BAX) increased its quarterly dividend by 14.4% to $0.28 per share, up from the previous dividend of $0.245 per share. The dividend’s forward yield is 1.29%. On May 25, Barclays analyst Travis Steed initiated coverage of Baxter International Inc. (NYSE: BAX) with an Equal-weight rating and a price target of $93 per share.
The company has a market cap of $40.5 billion. In the first quarter of 2021, Baxter International Inc. (NYSE: BAX) had an EPS of $0.76, beating estimates by $0.11, due to the growth in acute therapies sales in light of the COVID-19 surge. The company’s first-quarter revenue came in at $2.9 billion, up from $2.8 billion in the same period in 2020. Due to its agreement with BioNTech SE (NASDAQ: BNTX) to produce COVID-19 vaccines in Europe, Baxter International Inc.’s BioPharma Solutions segment increased 18% to $135 million. Furthermore, this year, the company will provide finishing services to Moderna, Inc. (NASDAQ: MRNA) for 60 million to 90 million COVID-19 vaccine doses.
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) worth $3.36 billion, lower than 42 hedge funds with $2.80 billion worth of stock a quarter earlier.
Just like Abbott Laboratories (NYSE: ABT), Becton, Dickinson and Company (NYSE: BDX), and Danaher Corporation (NYSE: DHR), Baxter International Inc. (NYSE: BAX) is one of the best medical technology stocks to buy according to market analysts.
8. Stryker Corporation (NYSE: SYK)
Number of Hedge Fund Holders: 46
Stryker Corporation (NYSE: SYK) ranks 8th on the list of 10 best medical technology stocks to buy now. The Michigan-based medical technology company sells surgical equipment, orthopedic implants for hip, knee, and spine, and neurotechnology products for minimally invasive medical procedures.
In June, JPMorgan maintained an Overweight rating on Stryker Corporation (NYSE: SYK), with a price target of $287 per share. JPMorgan analyst Robbie Marcus raised his bullish rating on Stryker Corporation (NYSE: SYK), citing the company’s MedSurg segment as a pillar of success and commenting on the company’s potential to scale faster than its medical technology peers in the coming years. The stock has returned 33% to investors over the past twelve months and 4.14% year to date.
The company has a market cap of $96 billion. In the first quarter of 2021, Stryker Corporation (NYSE: SYK) had an EPS of $1.93, missing estimates by $0.06. The company’s net sales in the first quarter came in at $4 billion, a 10.2% increase from $3.6 billion in the same period in 2020. In May, Stryker Corporation (NYSE: SYK) increased its quarterly dividend by 9.6% to $0.63 per share, up from the previous dividend of $0.57 per share. The dividend yield is 0.99%.
By the end of the first quarter of 2021, 46 hedge funds followed by Insider Monkey held stakes in Stryker Corporation (NYSE: SYK) with a total value of $3.15 billion, up from 44 hedge funds worth $3.22 billion, respectively, a quarter earlier.
Just like Abbott Laboratories (NYSE: ABT), Becton, Dickinson and Company (NYSE: BDX), and Danaher Corporation (NYSE: DHR), Stryker Corporation (NYSE: SYK) is a good medical technology stock to invest in.
7. Intuitive Surgical, Inc. (NASDAQ: ISRG)
Number of Hedge Fund Holders: 53
Intuitive Surgical, Inc. (NASDAQ: ISRG) ranks 7th on the list of the 10 medical technology stocks to buy. The California-based healthcare company develops and commercializes surgical robotics for minimally invasive surgeries. Among the company’s robotic-assisted medical instrument offerings are Ion endoluminal system and Da Vinci surgical system.
On June 14, Stifel analyst Rick Wise maintained a Buy rating on Intuitive Surgical, Inc. (NASDAQ: ISRG) and increased the price target to $1,060 per share from $960 previously. According to the analyst, rising robotic adoption in the US bariatric sector presents a growth opportunity for Intuitive Surgical, Inc. (NASDAQ: ISRG). The stock has returned 17% to investors year to date and shares increased 18% in the last three months.
The company has a market cap of $113 billion. In the second quarter of 2021, Intuitive Surgical, Inc. (NASDAQ: ISRG) had a non-GAAP EPS of $3.92, beating estimates by $0.86. The company’s revenue for the quarter was $1.46 billion, an increase of 71.3% year over year, beating estimates by $200 million. The company projected a gross profit margin of 70.5% to 71.5% of revenue for the fiscal year 2021. In the second quarter of 2021, the company shipped 328 da Vinci Surgical Systems, up from 178 in the same period in 2020.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Portland Hill Asset Management is a leading shareholder in Intuitive Surgical, Inc. (NASDAQ: ISRG) with 99 shares worth more than $91,000.
Just like Abbott Laboratories (NYSE: ABT), Becton, Dickinson and Company (NYSE: BDX), and Danaher Corporation (NYSE: DHR), Intuitive Surgical, Inc. (NASDAQ: ISRG) is one of the best medical technology stocks to buy according to analysts.
In the Q2 2021 investor letter of ClearBridge Investments, the fund mentioned Intuitive Surgical, Inc. (NASDAQ: ISRG), and discussed its stance on the firm. Here is what the fund said:
“Within health care, we added a new position in Intuitive Surgical, a maker of robotic instruments for soft tissue surgery. The market for such procedures is enormous, including those performed with the aid of the company’s DaVinci machines, whose three-dimensional imaging capabilities require smaller incisions, resulting in less nerve damage and bleeding and shorter patient stays. DaVinci machines are a $1 million-plus investment by hospitals that can be run continuously through the day, allowing for a greater number of procedures with less physician fatigue. Surgeons are trained on the device from medical school and residency on up. Combining the related training and supply chains, these purchases are very sticky. We see the opportunity for Intuitive Surgical to benefit from more indications for the devices, procedure growth, and greater sales in hospitals and surgical centers.”
6. Abbott Laboratories (NYSE: ABT)
Number of Hedge Fund Holders: 65
Abbott Laboratories (NYSE: ABT) ranks 6th on the list of the 10 medical technology stocks to buy. The Illinois-based healthcare company offers medical devices, diagnostic products, pharmaceutical products, and pediatric and adult nutritional products. Abbott Laboratories (NYSE: ABT) provides molecular diagnostics for COVID-19, HIV, and influenza viruses.
On July 12, Wells Fargo analyst Larry Biegelsen maintained an Overweight rating on Abbott Laboratories (NYSE: ABT) and increased the price target to $135 per share from $125 previously. According to the analyst, Abbott Laboratories’ (NYSE: ABT) core business is recovering quickly, and the company will have a better year in 2021 than it did in 2019, with sales and earnings per share anticipated to be at least in line with the consensus of $9.684 billion and $1.01 in Q2 2021.
The company has a market cap of $211 billion. In the first quarter of 2021, Abbott Laboratories (NYSE: ABT) had an EPS of $1.32, beating estimates by $0.05. The company’s revenue in the first quarter came in at $10.5 billion, up 35.3% year over year. The company’s global COVID-19 testing-related sales totaled $2.2 billion. In June, Abbott Laboratories (NYSE: ABT) has declared a quarterly dividend of $0.45 per share, consistent from the previous year. Year to date, Abbott Laboratories (NYSE: ABT) has gained 8% and shares increased 7% in the last month.
At the end of the first quarter of 2021, 65 hedge funds in the database of Insider Monkey held stakes worth $5.14 billion in Abbott Laboratories (NYSE: ABT), up from 64 in the preceding quarter worth $4.30 billion.
In its Q1 2021 investor letter, Florida-based investment management firm Polen Capital mentioned Abbott Laboratories (NYSE: ABT) and shared their insights on the company. Here is what the fund said:
“Abbott Laboratories developed and commercialized multiple COVID tests during 2020, delivering a double-digit performance in what could have otherwise been a very challenging year. Management expects earnings per share to grow more than 30% in 2021. We believe it is poised to sustainably deliver double-digit earnings per share growth even as COVID testing sales decline from an expected $6.5-7.5 billion in the fiscal year 2021 to potentially as low as $300-$500 million several years from now.
We have always been believers in Abbott management’s capital allocation prowess, and we think they continue to invest prudently.
Management is taking advantage of the COVID test profits to invest roughly $2 billion into R&D and marketing to bolster growth in the core business as it recovers from the pandemic. We think there could even be a durable increase in the longer-term growth rates of both the diagnostics and medical device segments, given investments in product development and direct-to-consumer (DTC) capabilities. Testing sales created a windfall for Abbott in the near term, and management is exploiting it with what we view as sound capital allocation.
We believe the company continues to be fairly valued despite being rewarded for such favorable business momentum during the quarter.”
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Disclosure: None. 10 Medical Technology Stocks to Buy is originally published on Insider Monkey.
