5 Medical Device Stocks for 2021

2. Abbott Laboratories (NYSE: ABT)

Number of Hedge Fund Holders: 65

Abbott Laboratories (NYSE: ABT) is a medical device and healthcare company operating worldwide. The company’s Diagnostic Products segment provides lab systems for immunoassay, clinical chemistry, hematology, and transfusion; molecular diagnostics systems. It ranks 2nd on our list of medical device stocks for 2021.

By the end of the first quarter of 2021, 65 hedge funds out of the 866 tracked by Insider Monkey held stakes in Abbott Laboratories (NYSE: ABT), with a total stake value of roughly $5.37 billion. This is compared to 64 hedge fund holders in the previous quarter, with stakes valued at about $4.3 billion.

Polen Capital, an investment management firm, mentioned Abbott Laboratories (NYSE: ABT) in its first-quarter 2021 investor letter. Here’s what they 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.”