14 Best Medical Device Stocks To Buy Now

Published on March 26, 2024 at 8:02 am by Sheryar Siddiq in Hedge Funds, News

In this article, we will discuss the 14 Best Medical Device Stocks To Buy Now. You can skip our detailed analysis of the Medical Device Industry and go directly to the 5 Best Medical Device Stocks To Buy Now.

The healthcare sector relies heavily on advancements in medical technology, which encompasses medical devices aiding in disease prevention, diagnosis, and treatment. Unlike pharmaceuticals or biologics, a medical device operates through physical, structural, or mechanical means rather than chemical or metabolic processes within or on the body. Key products within this domain include pacemakers, imaging equipment, dialysis machines, and implants.

The onset of the COVID-19 pandemic significantly impacted the medical device industry, much like many other sectors. Notably, the segment specializing in In Vitro Diagnostics (IVD) witnessed substantial revenue growth during 2020 and 2021, driven primarily by the heightened demand for rapid and PCR tests. Overall, while investment in digital health had been steadily increasing in the years leading up to the pandemic, it experienced a significant surge in 2021, reaching nearly $45 billion, surpassing the total funding accumulated between 2010 and 2017 combined.

In addition, integrating technology like artificial intelligence (AI) into healthcare has been revolutionary, transforming the methods of diagnosis, treatment, and patient monitoring. The potential applications of AI in healthcare are vast and impactful, ranging from analyzing radiological images for early detection to forecasting outcomes using electronic health records. A notable instance of AI merging with healthcare occurred in late March 2023 when NVIDIA Corporation (NASDA:NVDA) announced a collaboration with Medtronic Medtronic plc (NYSE:MDT), a leading healthcare technology provider dedicated to developing technology-enabled medical solutions. This partnership aims to incorporate NVIDIA’s healthcare and edge AI technologies into Medtronic’s FDA-cleared GI Genius, an intelligent endoscopy module designed to aid physicians in detecting pre-cancerous growths.

The global medical devices market, valued at $570 billion in 2022, is projected to reach approximately $996.93 billion by 2032, experiencing a compound annual growth rate (CAGR) of 5.8% from 2023 to 2032. Concurrently, the U.S. market is forecasted to reach around $246.51 billion by 2032, growing at a CAGR of 5.6% during this period. The surge in demand for innovative therapies and ongoing technological advancements in medical devices to address unmet needs in the healthcare sector are pivotal factors driving the growth of the medical devices market in the coming years.

The global medical device industry stands to experience substantial growth in the future. In that same vein, some of the best medical device stocks that investors should take note of include the likes of Abbott Laboratories (NYSE:ABT), Thermo Fisher Scientific Inc. (NYSE:TMO), and Johnson & Johnson (NYSE:JNJ), among others listed below.

14 Best Medical Device Stocks To Buy Now

A microscope with biomedical samples, highlighting the research efforts of the company.

Our Methodology

In selecting the best medical device stocks to buy now, we analyzed Insider Monkey’s Q4 2023 database to identify the leading contenders in the medical device industry, guided by hedge fund sentiment. The resulting list, organized by the number of hedge funds holding their shares, features companies offering products and services within the United States as well as internationally.

For these best medical device stocks, we used hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.

14. Inmode Ltd (NASDAQ:INMD)

Number of Hedge Fund Holders: 24

InMode Ltd. (NASDAQ:INMD) specializes in the development, advancement, manufacturing, and marketing of minimally invasive medical products catering to aesthetic purposes. The company’s innovations are based on its proprietary technologies, including radiofrequency assisted lipolysis and deep subdermal fractional radiofrequency. Additionally, InMode Ltd. (NASDAQ:INMD) designs and develops non-invasive medical aesthetic products for various procedures.

Earlier this February, Inmode Ltd (NASDAQ:INMD) released its fourth-quarter results. The adjusted earnings per share (EPS) for the period were $0.71, exceeding estimates by $0.04. Despite this positive performance, revenue for the quarter experienced a 5.1% year-over-year decline, amounting to $126.78 million. However, this figure surpassed estimates by $1.93 million.

According to Insider Monkey’s fourth quarter database, 24 hedge funds were bullish on InMode Ltd. (NASDAQ:INMD). Steve Cohen’s
Point72 Asset Management is the largest stakeholder of the company, with approximately 727,388 shares worth $16.17 million.

Much like Abbott Laboratories (NYSE:ABT), Thermo Fisher Scientific Inc. (NYSE:TMO), and Johnson & Johnson (NYSE:JNJ), InMode Ltd. (NASDAQ:INMD) ranks as one of the best medical device stocks to invest in.

13. Edwards Lifesciences Corporation (NYSE:EW)

Number of Hedge Fund Holders: 47

Edwards Lifesciences Corporation (NYSE:EW), headquartered in Irvine, California, is a leading medical technology company specializing in artificial heart valves and hemodynamic monitoring. The company is renowned for its development of the SAPIEN transcatheter aortic heart valve, which utilizes cow tissue mounted on a balloon-expandable, cobalt-chromium frame, and is deployed through a catheter.

On February 6, 2024, Edwards Lifesciences Corp (NYSE:EW) disclosed its financial results for the fourth quarter ended December 31, 2023. The company reported a notable 14% increase in Q4 sales to $1.53 billion and a 12% increase in full-year sales to $6.0 billion.

According to Insider Monkey’s fourth-quarter database, 47 hedge funds expressed bullish sentiments towards Edwards Lifesciences Corporation (NYSE:EW), compared to 48 hedge funds in the previous quarter. Notably, Ken Fisher’s Fisher Asset Management held a significant stake in the company, with 7.12 million shares valued at $543.53 million.

12. Veeva Systems Inc. (NYSE:VEEV)

Number of Hedge Fund Holders: 48

Veeva Systems Inc. (NYSE:VEEV) specializes in healthcare software services, assisting organizations in managing customer engagement, drug development, and various business operations. In September 2023, the company broadened its software portfolio by introducing a new cloud platform tailored to assist pharmaceutical manufacturers in overseeing their production and supply chains.

Veeva Systems Inc. (NYSE:VEEV) released its earnings results most recently on December 6. The technology firm reported earnings of $1.34 per share for the quarter, exceeding analysts’ consensus forecasts of $1.29 by $0.05. Veeva Systems Inc. (NYSE:VEEV) achieved a return on equity of 10.91% and a net margin of 24.68%. During the quarter, the company generated $616.51 million in revenue, slightly surpassing analyst expectations of $615.98 million.

According to Insider Monkey’s Q4 2023 database, 48 out of 933 hedge funds are shareholders of Veeva Systems Inc. (NYSE:VEEV), collectively holding a stake worth $1.47 billion.

11. Cardinal Health, Inc. (NYSE:CAH)

Number of Hedge Fund Holders: 49

Cardinal Health, Inc. (NYSE:CAH) is a multinational healthcare services corporation with its headquarters in Dublin, Ohio. It holds a prominent position as one of the leading revenue-generating companies in the United States. Specializing in the distribution of pharmaceuticals and medical devices, the company serves a vast network of over 100,000 locations.

At the conclusion of the fourth quarter in 2023, 49 hedge funds, as reported by Insider Monkey, held positions in Cardinal Health, Inc. (NYSE:CAH). This figure marks an increase from the 43 hedge funds in the previous quarter. The combined value of these holdings surpassed $1.93 billion.

10. Stryker Corporation (NYSE:SYK)

Number of Hedge Fund Holders: 50

Founded in 1941 and headquartered in Michigan, Stryker Corporation (NYSE:SYK) is a leading company in the field of medical technology products and services. Its business operations are structured into three main segments: Orthopaedics, MedSurg, and Neurotechnology and Spine.

On January 30, Stryker Corporation (NYSE:SYK) reported a Q4 non-GAAP EPS of $3.46 and a revenue of $5.8 billion, outperforming $0.19 and $200 million, respectively. Terry Smith’s Fundsmith LLP is the leading stakeholder of the company, with 5.5 million shares worth $1.65 billion.

Baron Health Care Fund stated the following regarding Stryker Corporation (NYSE:SYK) in its fourth quarter 2023 investor letter:

“We initiated a position in Stryker Corporation (NYSE:SYK) during the quarter. Stryker is a large diversified medical device company with two business segments: (1) MedSurg and Neurotechnology, and (2) Orthopedics and Spine. The stock sold off during the quarter along with many other medical device stocks because of concerns about the impact of GLP-1 weight loss medicines on their business. Specific to Stryker, the concern was that weight loss would reduce demand for hip and knee implant procedures because obesity is one factor that drives osteoarthritis. We think this concern was overstated and saw the sell-off as an opportunity to buy a high-quality growth company at a reasonable valuation. We think Stryker is well positioned with its broad product portfolio to benefit from the trend of more orthopedic and other medical procedures moving from the hospital to ambulatory surgery centers. The company also has several new product launches coming up that should drive growth. At its recent Investor Day, management provided long-term financial goals including organic sales growth at the high end of the medical technology industry and double-digit EPS growth.”

9. Medtronic plc (NYSE:MDT)

Number of Hedge Fund Holders: 56

Medtronic plc (NYSE:MDT) is a renowned global medical technology company specializing in the development, manufacturing, and distribution of device-based medical therapies worldwide. Notably, Medtronic plc (NYSE:MDT) has played a significant role in advancing robotic-assisted surgery technologies, particularly in the realms of minimally invasive surgery and robotic-assisted spine procedures.

According to data from Insider Monkey, the number of hedge funds holding stakes in Medtronic plc (NYSE:MDT) decreased to 56 in Q4 2023, down from 59 in the previous quarter. The combined value of these stakes exceeds $2.68 billion.

Polen International Growth Strategy stated the following regarding Medtronic plc (NYSE:MDT) in its fourth quarter 2023 investor letter:

“Medtronic plc (NYSE:MDT) is the largest medical technology company in the world. Despite a few tough years characterized by post-COVID supply chain issues, Chinese market payment changes, and diabetes business challenges, the company has continued to invest aggressively in its R&D pipeline. Because of this long-term mindset and commitment to product innovation, the company is in a position today where it has numerous significant new product launches across the business, helping to accelerate growth and improve profitability. More recently, the market’s infatuation with the promise of GLP-1 drugs has resulted in valuation de-ratings across the medtech industry broadly, to which Medtronic was not immune. The combination of all of these factors has resulted in Medtronic shares trading at their lowest valuation in a decade. Given the emerging business momentum, we felt the valuation offers a compelling chance to increase our weight in the world’s largest medtech company.”

8. Illumina, Inc. (NASDAQ:ILMN)

Number of Hedge Fund Holders: 58

Illumina, Inc. (NASDAQ:ILMN) is dedicated to developing, manufacturing, and distributing tools and systems for in-depth exploration of genetic variations and biological functions. Its operations consist of two main segments: Core Illumina and GRAIL. The company provides a variety of instruments and materials essential for genetic sequencing and analysis. Additionally, it offers Galleri, a multi-cancer early detection test.

As of the end of December, 58 funds in our database held shares of Illumina, Inc. (NASDAQ:ILMN). Among these investors is Carl Icahn’s Icahn Capital, which disclosed ownership of 430,000 shares in its latest 13F filing.

Baron Opportunity Fund stated the following regarding Illumina, Inc. (NASDAQ:ILMN) in its fourth quarter 2023 investor letter:

“Illumina, Inc. (NASDAQ:ILMN) has been the leading provider of DNA sequencing platforms. The stock declined due to weak financial results, management turnover, and uncertainty about the outcome of the acquisition of Grail, which regulators have challenged on antitrust grounds and in the meantime has been burning cash flow and hampering Illumina’s consolidated performance. We exited our Illumina position during the quarter but will continue our research and analysis regarding the adoption of Illumina’s new sequencing instruments, management’s plan to divest Grail, the evolving DNA-sequencing competitive environment, and the new company management team.”

7. Abbott Laboratories (NYSE:ABT)

Number of Hedge Fund Holders: 64

Abbott Laboratories (NYSE:ABT) is a multinational healthcare company headquartered in Abbott Park, Illinois, United States. Renowned for its diverse product portfolio, Abbott offers a wide range of products including Pedialyte, Similac, BinaxNOW, Ensure, Glucerna, ZonePerfect, FreeStyle Libre, i-STAT, and MitraClip.

As of March 18, the company provides a quarterly dividend of $0.55 per share, boasting a dividend yield of 1.94%. With an impressive track record of dividend growth spanning 52 years, ABT stands out as one of the best medical device stocks on our radar.

As of the end of the December quarter in 2023, Insider Monkey reports that 64 hedge funds have stakes in Abbott Laboratories (NYSE:ABT), down from 69 in the previous quarter. These stakes collectively hold a value of nearly $2.5 billion.

6. DexCom, Inc. (NASDAQ:DXCM)

Number of Hedge Fund Holders: 69

DexCom, Inc. (NASDAQ:DXCM) is a company committed to advancing the development, manufacturing, production, and distribution of continuous glucose monitoring (CGM) systems, designed to streamline diabetes management effectively. The CGM system consists of a sensor device and a backend system, providing real-time data on glucose levels, body temperature, and contextual information in an easily understandable format. These insights hold considerable value for both patients and healthcare professionals.

In the fourth quarter of 2023, Insider Monkey analyzed 933 hedge fund holdings and identified 69 shareholders of DexCom, Inc. (NASDAQ:DXCM).

Artisan Mid Cap Fund stated the following regarding DexCom, Inc. (NASDAQ:DXCM) in its fourth quarter 2023 investor letter:

“Among our top contributors were Chipotle, DexCom, Inc. (NASDAQ:DXCM) and Shopify. DexCom is the leader in continuous glucose-monitoring systems (CGM). We believe it is well positioned to continue penetrating the Type 1 diabetes market and to drive adoption in the much larger Type 2 diabetes market, with data increasingly supporting the clinical and economic case for using CGM sensors. By most indicators, DexCom is poised for a period of significant top- and bottom-line growth. Having made substantial investments in global distribution, product development and branding, the company has a receptive base of patients, physicians and payors ready for its newly launched next-generation G7 sensor. Shares experienced weakness earlier in the year due to market concerns that the rapid growth of GLP-1 diabetes/obesity drugs will reduce demand for diabetes management technologies. However, our view is that while the magnitude of the GLP-1 adoption will likely have both good and bad impacts on how CGMs are used, these changes will be slow to play out. Given this view, and an opportunistic valuation, we added to our position in Q4. Our patience was rewarded as shares rallied after the company reported strong financial results and management provided evidence of the synergies between CGMs and GLP-1 drugs in the fight against the obesity epidemic.”

DexCom, Inc. (NASDAQ:DXCM) joins the ranks of Abbott Laboratories (NYSE:ABT), Thermo Fisher Scientific Inc. (NYSE:TMO), and Johnson & Johnson (NYSE:JNJ) as one of the best medical device stocks investors should keep on their radars.

Click here to continue reading and see 5 Best Medical Device Stocks To Buy Now.