In this article, we will take a look at the 12 most promising medical stocks according to analysts. To see more such companies, go directly to 5 Most Promising Medical Stocks According to Analysts.
Regardless of the short-term market situation, the healthcare industry has a huge growth potential. According to a report by McKinsey, healthcare profit pools are expected to grow at a CAGR of 4% from 2021 through 2026 to reach $790 billion. McKinsey said it expects the industry to face difficulties in 2023 amid rising inflation and labor shortages. However, the firm believes the industry will be able to overcome these problems in 2024 and beyond.
In 2022, the healthcare sector performed relatively well when compared to other sectors. A Wall Street Journal report in November 2022 highlighted that the healthcare industry was offering a refuge to investors who were getting hammered by losses in other industries. The report said that the S&P healthcare sector index was down 7.3% in 2022 through the start of November, outperforming the broader market by 14 percentage point, which was the widest gap since 2000.
The medical sector in the broader healthcare industry has long-term growth opportunities. The KPMG 2023 Healthcare and Life Sciences Investment Outlook report said that some of the important factors that are drawing the attention of leaders of the medical devices industry include innovation in diabetic care, robotic surgery, connected devices and cardiology.
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Our Methodology
For this article we first used the Finviz stock screener to list down all the stocks in the medical industry. We chose stocks from all categories of the industry — Medical Care, Medical Devices, Medical Distribution and Medical Instruments and Supplies. From the huge resultant dataset, we chose the stocks that have average analyst price targets 30% above their current prices as of February 15. We sorted the resultant list of stocks in descending order of market cap and picked top 12 stocks with the most upside potential.
Most Promising Medical Stocks According to Analysts
12. AdaptHealth Corp. (NASDAQ:AHCO)
Number of Hedge Fund Holders: 14
One-Year Price Target: $28.55
Medical equipment and supplies company AdaptHealth Corp. (NASDAQ:AHCO) ranks 12th in our list of the most promising medical stocks according to analysts. In January, AdaptHealth Corp. (NASDAQ:AHCO) commented on its preliminary Q4 results.
For the full year 2022, AdaptHealth Corp. (NASDAQ:AHCO) said it expects it net revenue to be near the midpoint of the previously-provided guidance range of $2.950 billion to $3.010 billion. The consensus for this figure was $2.98 billion.
For full-year 2023, AdaptHealth Corp. (NASDAQ:AHCO) expects revenue of $3.210 billion to $3.290 billion, versus the consensus estimate of $3.26 billion.
As of the end of the third quarter of 2022, 14 hedge funds reported having stakes in AdaptHealth Corp. (NASDAQ:AHCO). The total value of these stakes was $276 million. The biggest stakeholder of AdaptHealth Corp. (NASDAQ:AHCO) during this period was James E. Flynn’s Deerfield Management which owns a $154 million stake in AdaptHealth Corp. (NASDAQ:AHCO).
11. Inari Medical, Inc. (NASDAQ:NARI)
Number of Hedge Fund Holders: 20
One-Year Price Target: $90.63
California-based Inari Medical, Inc. (NASDAQ:NARI) makes devices for interventional treatment of venous diseases in the United States. Inari Medical, Inc. (NASDAQ:NARI) looks promising because its one-year estimated price target is $90.63, while it was trading at $53.92 as of the market close of February 13.
In January, Inari Medical, Inc. (NASDAQ:NARI) jumped after the company posted strong revenue for 2022 and gave an upbeat 2023 guidance.
According to Inari Medical, Inc. (NASDAQ:NARI)’s preliminary unaudited financials, Inari (NARI) projected revenue of $107 million to $108 million for the fourth quarter, while for the full year it was expecting revenue of $382.7 million – $383.7 million.
As of the end of the third quarter of 2022, 20 hedge funds tracked by Insider Monkey had stakes in Inari Medical, Inc. (NASDAQ:NARI). The total worth of these stakes was $147 million.
Here is what Baron Funds specifically said about Inari Medical, Inc. (NASDAQ:NARI) in its Q3 2022 investor letter:
“Inari Medical, Inc. (NASDAQ:NARI) makes catheter-based devices to remove clots from venous thromboembolism (VTE). VTE is the third most common vascular condition in the U.S. after heart attacks and strokes and if left untreated can be fatal. Shares held up well for the quarter. The company held an Investor Day where it unveiled products to enter several new addressable markets. The VTE treatment space is still in the early days of converting to devicebased interventions, and we believe Inari is well positioned to benefit.”
10. Azenta, Inc. (NASDAQ:AZTA)
Number of Hedge Fund Holders: 22
One-Year Price Target: $64.60
Azenta, Inc. (NASDAQ:AZTA) falls in the category of medical instruments and supplies industry segment. Earlier in February, Azenta, Inc. (NASDAQ:AZTA) posted its fiscal Q1 results. Azenta, Inc. (NASDAQ:AZTA) missed GAAP EPS and revenue estimates amid slow growth in the Life Science Services segment. Revenue nonetheless increased by 27% in the period on a YoY basis. Adjusted EPS in the period was $0.12.
At the end of the third quarter of 2022, 22 hedge funds out of the 920 funds tracked by Insider Monkey had stakes in Azenta, Inc. (NASDAQ:AZTA). The net worth of these stakes was over $171 million. The biggest stakeholder of Azenta, Inc. (NASDAQ:AZTA) during this period was Seth Rosen’s Nitorum Capital which owns a stake worth over $42 million in the company.
9. AtriCure, Inc. (NASDAQ:ATRC)
Number of Hedge Fund Holders: 22
One-Year Price Target: $61.00
Ohio-based AtriCure, Inc. (NASDAQ:ATRC) sells medical devices for surgical ablation of cardiac tissue and systems. AtriCure, Inc. (NASDAQ:ATRC) has lost about 32% over the past 12 months and its one-year price estimate shows attractive upside from current levels. In November, AtriCure, Inc. (NASDAQ:ATRC) posted Q3 results. Its GAAP EPS in the quarter came in at -$0.27, missing estimates by $0.02. Revenue in the period jumped about 18.1% to total $83.2 million, beating estimates by $1.88 million.
For full-year 2022, AtriCure, Inc. (NASDAQ:ATRC) said it expects revenue to come between $328 million to $333 million versus the consensus of $328.61 million.
At the end of the third quarter of 2022, 22 hedge funds among the 920 funds tracked by Insider Monkey reported having stakes in AtriCure, Inc. (NASDAQ:ATRC). The biggest hedge fund stakeholder of the company was Brian Ashford-Russell and Tim Woolley’s Polar Capital which owns a $22 million stake in the firm.
8. Warby Parker Inc. (NYSE:WRBY)
Number of Hedge Fund Holders: 23
One-Year Price Target: $19.64
Warby Parker Inc. (NYSE:WRBY) makes eyewear products and solutions. Warby Parker Inc. (NYSE:WRBY) falls in the industry classification of Medical Instruments & Supplies under the healthcare sector.
Warby Parker Inc. (NYSE:WRBY) had been under pressure as investors thought amid rising inflation, consumer discretionary spending will fall, hurting luxury companies. However, in December, Wolfe Research negated these concerns and set an Outperform rating on Warby Parker Inc. (NYSE:WRBY) with a $20 price target. The firm said that Warby Parker Inc. (NYSE:WRBY) is operating in $44 billion optical retail market which it thinks is “recession resistant.” The analyst firm sees a “multi-year unit growth opportunity with upside from vision care offerings” for Warby Parker Inc. (NYSE:WRBY).
7. Axonics, Inc. (NASDAQ:AXNX)
Number of Hedge Fund Holders: 25
One-Year Price Target: $83.56
California-based Axonics, Inc. (NASDAQ:AXNX) is working on implantable sacral neuromodulation (SNM) devices to treat patients with bladder and bowel dysfunction. Axonics, Inc. (NASDAQ:AXNX) has gained about 11% over the past one year. Recently, Axonics, Inc. (NASDAQ:AXNX)’s fourth-generation rechargeable sacral neuromodulation system (SNM) was approved by the FDA. SNM is a therapy to treat urinary incontinence.
In January, Axonics, Inc. (NASDAQ:AXNX) said it expects its Q4 revenue to come in the range of $85.6 million to $86.0 million, which will show an increase of about 61% on a YoY basis. The consensus estimate for this metric is $74.30 million.
As of the end of the third quarter of 2022, 25 hedge funds reported having stakes in Axonics, Inc. (NASDAQ:AXNX). The net worth of these stakes was about $309 million.
Carillon Tower Advisers made the following comment about Axonics, Inc. (NASDAQ:AXNX) in its Q3 2022 investor letter:
“Axonics, Inc. (NASDAQ:AXNX) was a strong performer during Q3. The company reported excellent quarterly earnings, as demand for the company’s recently introduced Sacral Nerve Modulation System remains high, as patients seek solutions for their urinary and bowel dysfunction. Clearly, this medical treatment is less discretionary compared to other medical procedures that can be delayed or rescheduled.”
6. Tandem Diabetes Care, Inc. (NASDAQ:TNDM)
Number of Hedge Fund Holders: 28
One-Year Price Target: $59.93
Tandem Diabetes Care, Inc. (NASDAQ:TNDM) makes medical devices addressing diabetes patients. In January, Wolfe Research started covering several medical companies in the diabetes industry, including Tandem Diabetes Care, Inc. (NASDAQ:TNDM). The firm gave a Peer Perform rating to Tandem Diabetes Care, Inc. (NASDAQ:TNDM). Tandem Diabetes Care, Inc. (NASDAQ:TNDM) recently reaffirmed its 2023 outlook. Tandem Diabetes Care, Inc. (NASDAQ:TNDM) expects its global non-GAAP sales to increase by 11%-12% compared to 2022.
As of the end of the third quarter of 2022, 28 hedge funds tracked by Insider Monkey reported owning stakes in Tandem Diabetes Care, Inc. (NASDAQ:TNDM).
Carillon Tower Advisers made the following comment about Tandem Diabetes Care, Inc. (NASDAQ:TNDM) in its Q3 2022 investor letter:
“Tandem Diabetes Care, Inc. (NASDAQ:TNDM) disappointed investors during the quarter with lackluster earnings. Tandem produces insulin pump systems for diabetic patients. Their growth in the US is slowing due to a new product being launched by a competitor. While market share doesn’t typically shift radically in this device market, investor sentiment is definitely strongly against Tandem for now.”
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