In this article, we will be taking a look at the 7 best medical device stocks to buy right now.
Global Medical Devices Market: Growth, Technological Advancements, and Key Industry Trends
The global medical devices market is experiencing robust growth, driven by technological advancements, an aging population, and an increasing prevalence of chronic diseases. In 2023, the market was valued at USD 518.46 billion. It is projected to grow from USD 542.21 billion in 2024 to USD 886.80 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 6.3% during this forecast period.
The most valuable medical device companies in the United States include Medtronic, Johnson & Johnson, Abbott Laboratories, and others. These companies are leaders in diagnostic imaging and surgical robotics, and they are known for their excellence in research, development, and commercialization. Their efforts have led to advancements in healthcare delivery both nationally and internationally. The U.S. medical devices market size was estimated at USD 169.51 billion in 2023, per Precedence Research. It is predicted to reach approximately USD 328.65 billion by 2034, growing at a CAGR of 6.2% from 2024 to 2034.
The U.S. Cluster Mapping Tool highlights the significance of the Medical Devices industry, which employed over 329,000 people and had a payroll of $25.8 billion in 2020. Globally, the 2023 EY Medical Technology report emphasizes key trends for Medtech leaders, including financing and supply chain management. While R&D investment hit a record $24.7 billion, it marked a return to historical norms in 2022. The report also notes a sharp decline in mergers and acquisitions, signaling a reduced focus on inorganic growth strategies. The report projects the global medical device outsourcing market to reach $300.09 billion by 2032, with a CAGR of 11.14% from 2021 to 2028. Key growth drivers include cost-effectiveness, increased efficiency, and the demand for specialized expertise.
The COVID-19 pandemic greatly affected the medical device industry, with In Vitro Diagnostics (IVD) seeing major revenue growth in 2020 and 2021 due to demand for rapid and PCR tests. Investment in digital health surged in 2021, reaching nearly $45 billion, surpassing total funding from 2010 to 2017 combined.
Integrating technology like artificial intelligence (AI) into healthcare has transformed diagnosis, treatment, and patient monitoring. AI applications range from analyzing radiological images for early detection to forecasting outcomes using electronic health records. A notable example occurred in March 2023 when NVIDIA Corporation announced a collaboration with Medtronic to incorporate its AI technologies into Medtronic’s FDA-cleared GI Genius, an intelligent endoscopy module that aids in detecting pre-cancerous growths.
A person undergoing a non-invasive aesthetic procedure featuring advanced medical device platforms.
Our Methodology
For our methodology, we have ranked the best medical-device stocks to buy right now based on the number of hedge funds that held stake in them as of Q2, 2024.
“Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).”
Here is our list of the 7 best medical device stocks to buy right now.
7. Illumina, Inc. (NASDAQ:ILMN)
Number of Hedge Fund Holders: 56
Illumina, Inc. (NASDAQ:ILMN) is based in San Diego and focuses on medical diagnostics and research, offering products like DNA library preparation kits and robot control software for the healthcare industry.
As of Q2 2024, Illumina, Inc. (NASDAQ:ILMN) Acquired Fluent Biosciences, which is a developer of an emerging and highly differentiated single-cell technology. Illumina also presented 14 research abstracts at the ASCO Annual Meeting and integrated its XLEAP-SBS™ chemistry into all reagents for the NextSeq™ 1000/2000 sequencers. The company expanded its oncology offerings with TruSight™ Oncology 500 HT and TSO 500 ctDNA v2 assays. Additionally, it launched DRAGEN™ v4.3, the latest version of its sequencing analysis software.
Illumina, Inc. (NASDAQ:ILMN) was referenced by Patient Capital Management in their investor letter dated Q2 2024. The company stated as follows:
“Illumina, Inc. is a good example. We entered the name late last year as the company began to trade at a 5-year low. The company is a leader in the genomic sequencing space but made an ill-advised acquisition of Grail, a blood-based multi-cancer early detection product, in 2021 for $8 billion. Grail was an annual ~$600m drag on profitability hitting the financials at the same time that competition began to pick up and the overall demand environment began to weaken. Despite increased competition in the genome sequencing space, Illumina continues to be a leader with ~80% market share today. With the successful separation of Grail Inc. (GRAL) in June, Illumina has now returned to a pure-play sequencing company. As the company returns to historical profitability post Grail spin-off and as the demand environment normalizes post COpost-COVIDlieve you can buy a market leader in a secularly growing industry for less than a market multiple.”
As of Q2 2024, 56 hedge funds tracked by Insider Monkey held stakes in the stock with Corvex Capital being the largest stakeholder among these, with 2,289,486 shares worth $238,976,549. On top of that, 17 analysts have set a 12-month average price target of $150.29 for Illumina, with forecasts ranging from $105.00 to $242.00, indicating a potential 19.14% increase from the current price of $126.15.
6. DexCom, Inc. (NASDAQ:DXCM)
Number of Hedge Fund Holders: 64
DexCom, Inc. (NASDAQ:DXCM) is a medical technology company that specializes in continuous glucose monitoring (CGM) systems for people with diabetes. At its core, Dexcom develops and manufactures devices that allow individuals to track their blood glucose levels in real-time without the need for frequent finger pricks.
The launch of Stelo, DexCom’s first over-the-counter nonprescription glucose biosensor, represents a significant catalyst for the company’s growth. This FDA-cleared device expands DexCom’s market reach beyond traditional diabetes patients, targeting individuals who want to monitor their glucose levels for general health purposes.
DexCom Inc. (NASDAQ:DXCM) posted solid financial results for the second quarter of 2024, with earnings per share (EPS) of $0.43, above the $0.39 predicted. DexCom Inc. (NASDAQ:DXCM) had revenue of $1 billion as opposed to the estimated $1.04 billion, but its strong earnings per share (EPS) underscores the company’s profitability and room for expansion. The continual technological improvements in continuous glucose monitoring (CGM) and the growing market share of DexCom Inc. (NASDAQ:DXCM) in the healthcare sector attest to the company’s strength in an industry that is rapidly developing.
Regarding DexCom, Inc. (NASDAQ:DXCM), Carillon Eagle Mid Cap Growth Fund made the following statement in its Q2 2024 investor letter:
“DexCom, Inc. is a medical device company that helped pioneer the design and development of continuous glucose monitoring systems (CGMs). They are primarily used by a large fraction of Type 1 diabetics and a meaningfully growing number of Type 2 diabetics to monitor their blood glucose levels. As such, we believe there is a huge greenfield opportunity as many individuals in the addressable market still rely on finger prick tests. Despite beating analysts’ estimates and raising guidance in most quarters, the stock has taken a hit as the size of the beats and raises have lately become a bit constrained. Nevertheless, we continue to be supportive of the stock through new product introductions and the integration of its CGMs into tubed and tubeless insulin pump systems.”
Around 64 hedge fund holders tracked by Insider Monkey held stake in the stock in Q2 2024. The largest stakeholder in the company among these was Holocene Advisors with 1,773,235 shares worth $201,049,384. The stock holds a Strong Buy rating. On the back of that, 17 analysts have set a 12-month average price target of $99.94 for Dexcom, suggesting a potential 49.77% increase from the current price of $66.73.
5. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of Hedge Fund Holders: 67
Intuitive Surgical, Inc. (NASDAQ:ISRG) is a leader in robotic surgery, primarily known for its Da Vinci system, which utilizes AI to enhance precision and expand surgical capabilities. The system improves accuracy in tissue manipulation and surgical planning and is increasingly used in urological, gynecological, and general surgeries, resulting in better patient outcomes through minimally invasive techniques.
Intuitive Surgical, Inc. (NASDAQ:ISRG) is also expanding its product portfolio, with the recent FDA clearance of its next-generation da Vinci 5 system in March 2024. This new system features improved imaging, force feedback, and other advancements that could drive further adoption and upgrades. In Q2 2024, the company reported revenue of $2.01 billion, a 14.5% increase year-over-year. This growth was driven by a 17% increase in da Vinci procedures and the placement of 341 new systems during the quarter.
As of Q2, 67 hedge funds tracked by Insider Monkey held stake in the stock with Fisher Asset Management being the largest stakeholder of these with 4,696,173 shares worth $2,089,093,098. Also, 18 Wall Street analysts have set a 12-month average price target of $490.06 for Intuitive Surgical, with estimates ranging from $410.00 to $560.00, indicating a potential 1.17% increase from the current price of $484.39.
4. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 80
Johnson & Johnson (NYSE:JNJ) is a global healthcare giant that operates across three main segments: pharmaceuticals, medical devices, and consumer health products. The company develops and manufactures a wide range of products, from everyday items like Band-Aids and baby shampoo to advanced medical devices and life-saving drugs. Johnson & Johnson also has stake in several subsidiaries including Janssen Pharmaceuticals, Ethicon Inc., Abiomed, and Johnson & Johnson Vision, among others.
In Q2 2024, Johnson & Johnson (NYSE:JNJ) reported sales of $22.4 billion, reflecting a 4.3% increase year-over-year. The company achieved regulatory approvals for several medications and broadened its biotechnology presence. In April, Johnson & Johnson acquired Shockwave Medical, a company specializing in cardiovascular medical devices, strengthening its role in cardiovascular intervention and medical technology.
As of Q2 2024, 80 hedge funds tracked by Insider Monkey held stake in the stock with Fisher Asset Management being the largest stakeholder from among these with shares worth $1,024,499,855. The stock holds a Moderate Buy rating and 14 Wall Street analysts have set a 12-month average price target of $171.83 for Johnson & Johnson, indicating a potential 6.99% increase from the current price of $160.60.
3. Boston Scientific Corporation (NYSE:BSX)
Number of Hedge Fund Holders: 82
Boston Scientific Corporation (NYSE:BSX) is a leading global medical device manufacturer, offering products like stents, catheters, and cardiac monitors, with an annual revenue of $15.2 billion. Operating in over 100 countries, the company excels in technologies such as pulsed-field ablation (FPA), which allows targeted treatment while preserving organ structure. The launch of its Farapulse FPA product in January contributed to a 17% revenue growth in the U.S. in Q2. Global regulatory approval for Farapulse could further benefit Boston Scientific, whose shares have risen 44% year to date.
Boston Scientific Corporation (NYSE:BSX) was mentioned by Artisan Partners in their investor letter dated Q2 2024. The fund said as follows:
“Boston Scientific is a global developer, manufacturer, and marketer of medical devices that are used in a broad range of interventional medical specialties. The company develops cardiovascular and cardiac rhythm management products, including imaging catheters, imaging systems, and guidewires. It also makes devices used for electrophysiology, endoscopy, pain management (neuromodulation), urology, and pelvic health, including laser systems, hydrogel systems, and brain stimulation systems. Boston Scientific markets its products in about 130 countries; the U.S. generates about 60% of its revenue.
We believe Boston Scientific, as a leader in medical devices, is benefiting from the strong utilization trends coming out of COVID-19, positive demographic trends with aging patients, and new product innovation to gain market share. The company has executed well against the long-range plan issued last fall, which calls for organic sales growth in the range of 8%-10%, 150 basis points of operating margin expansion, and category leadership over the period 2024 through 2026. Additionally, we see a consistent track record of accelerating organic sales growth and a track record of accretive M&A.”
In Q2 2024, 82 hedge funds tracked by Insider Monkey held stakes in the stock with Citadel Investment Group being the largest hedge fund holder among these with 12,499,867 shares worth $962,614,757. Analysts are bullish on BSX giving it a Strong Buy rating. Also, 19 Wall Street analysts have set a 12-month average price target of $88.06 for Boston Scientific, with estimates ranging from $78.00 to $100.00, indicating a potential 5.46% increase from the current price of $83.50.
2. Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 83
Danaher Corporation (NYSE:DHR) is a global science and technology innovator specializing in life sciences and diagnostics. At its core, Danaher designs manufactures, and markets medical, industrial, and commercial products and services.
On September 6, TD Cowen reiterated its Buy rating on Danaher Corporation, setting a price target of $310 after an investor day focused on diagnostics, where the company emphasized a shift towards platform-level innovation over an Operating Company (OpCo) approach. Danaher reaffirmed its financial guidance for Q3 and the full year of 2024, despite anticipating a slight year-over-year decline in non-GAAP core revenue. In Q2, the company surpassed expectations with $5.7 billion in revenue, driven by strategic acquisitions and a focus on biotech and life sciences. Additionally, Cepheid’s 4-in-1 diagnostic tests for COVID-19, Flu A and B, and RSV are expected to enhance future revenue.
L1 Capital Investment Fund said the following about DHR in their investor letter for the second quarter of 2024:
“We made a number of relatively modest adjustments to the Portfolio in the June 2024 quarter, totalling less than 10% of the Fund’s investments. We divested our remaining holding in Danaher Corporation (NYSE:DHR). Danaher is one of the leading providers of equipment and services to the life sciences and diagnostics industries and is one the best run industrial businesses in the world. Many companies aim to emulate the ‘Danaher Business System’ of continuous improvement. We have no concerns with the quality of Danaher, the share price simply increased above our view of fair value. A core principle of our investment process is to maintain valuation discipline and we divested our investment, purely on valuation grounds. Danaher has moved to our Bench of potential future investments. Danaher’s share price has fallen around 10% since we sold our investment, and if it continues to drift down, we may have the opportunity to reinvest in a very high-quality business at a more attractive valuation.”
As of Q2 2024, 83 hedge funds tracked by Insider Monkey held stakes in the stock with Fisher Asset Management being the largest stakeholder with shares worth $1,108,420,324. 15 analysts have set a 12-month average price target of $282.53 for Danaher, with forecasts ranging from $250.00 to $310.00, indicating a potential 5.47% increase from the current price of $267.88.
1. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 108
Thermo Fisher Scientific Inc. (NYSE:TMO) tops the list for being the best medical device stocks to buy right now. Thermo Fisher’s product portfolio is vast, encompassing everything from basic lab equipment to sophisticated analytical instruments. They produce items such as centrifuges, microscopes, PCR machines, mass spectrometers, and chromatography systems. Additionally, they offer a comprehensive suite of reagents, chemicals, and consumables used in various scientific applications.
In Q2 2024, Thermo Fisher Scientific Inc. (NYSE:TMO) reported $10.5 billion in revenue, a 1.3% year-over-year decline, yet exceeded analysts’ expectations by $23.4 million. Operating cash flow rose to $1.96 billion, and free cash flow increased to $1.7 billion. On September 20, Morgan Stanley raised the price target for TMO stock from $655 to $680, maintaining an Overweight rating and highlighting the company’s strong long-term growth outlook.
Regarding Thermo Fisher Scientific Inc. (NYSE:TMO), Polen Focus Growth Strategy made the following statement in its investor letter for the first quarter of 2024:
“We increased our positions in Thermo Fisher Scientific Inc. (NYSE:TMO), Visa, Zoetis, Nike, and Abbott Labs. Each of these companies is durable and available at attractive valuations, in our view, for the growth we see ahead. In fact, in the case of ThermoFisher, Nike, and Abbott Labs, we expect accelerating earnings growth in the back half of 2024 after more difficult earnings growth periods pass for each of these companies. ThermoFisher and Abbott will finally wind down most of their COVID-19 testing and vaccine-related efforts due to a lack of demand, so these should no longer be revenue growth headwinds.”
In Q2 2024, 108 hedge funds tracked by Insider Monkey held stakes in the stock with Fisher Asset Management being the largest stakeholder with shares worth $1,421,748,082. The stock also holds a Strong Buy rating based on 17 Wall Street analysts.
“Overall, TMO ranks first among the 7 best medical device stocks to buy now. While we acknowledge the potential of medical companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GOOGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.”
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