We recently published a list of 8 Most Promising Medical Stocks According to Hedge Funds. In this article, we are going to take a look at where GE Healthcare Technologies Inc. (NASDAQ:GEHC) stands against other most promising medical stocks.
Growth and Innovation in the Global Medical Devices Sector
The healthcare sector depends on medical technology advancements, particularly devices used in disease prevention, diagnosis, and treatment. Unlike pharmaceuticals, medical devices work through physical or mechanical means rather than chemical processes. Key products include pacemakers, imaging equipment, dialysis machines, and implants.
Like many other industries, the medical device industry was greatly affected by the start of the COVID-19 pandemic. Interestingly, the In Vitro Diagnostics (IVD) segment saw significant revenue growth in 2020 and 2021, mostly due to the increased demand for PCR and fast testing. Overall, even while funding for digital health had been rising gradually in the years preceding the pandemic, it saw a notable uptick in 2021, hitting around $45 billion, more than all of the funds amassed between 2010 and 2017.
The global market for medical devices, estimated to be worth $570 billion in 2022, is expected to increase at a compound annual growth rate (CAGR) of 5.8% from 2023 to 2032, reaching over $996.93 billion. By 2032, the U.S. market is expected to have grown to a value of around $246.51 billion, with a compound annual growth rate (CAGR) of 5.6%. Key drivers propelling the medical devices market’s expansion in the upcoming years are the rise in demand for cutting-edge treatments and continuous technical developments in medical devices to meet unmet demands in the healthcare industry.
The importance of the medical devices sector, which employed over 329,000 people and generated $25.8 billion in payroll in 2020, is highlighted by the U.S. Cluster Mapping Tool. The 2023 EY Medical Technology study highlights supply chain management and financing as two important topics for Medtech leaders worldwide. In 2022, R&D expenditure returned to historical norms, despite reaching a record $24.7 billion. A significant drop in mergers and acquisitions is also noted in the report which indicates a diminished emphasis on inorganic growth tactics.
Artificial intelligence (AI) and other technologies have revolutionized patient monitoring, diagnosis, and treatment in the healthcare industry. Applications of AI include predicting results using electronic health information and evaluating radiological images for early detection. One noteworthy instance was when NVIDIA Corporation and Medtronic announced in March 2023 that they would be integrating NVIDIA’s AI technology into Medtronic’s FDA-approved GI Genius, an intelligent endoscopic module that helps detect precancerous growths.
Also Read 10 Best Healthcare Stocks to Buy According to Hedge Funds and 10 Best Mid-Cap Healthcare Stocks to Buy Now.
Our Methodology
For our methodology, we began by filtering medical stocks from healthcare equipment ETFs. Next, we identified those with the highest number of hedge fund holders as of Q2 2024, using data from the Insider Monkey database. The final selection was ranked based on the number of hedge fund holders to prioritize stocks with greater institutional interest.
“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).”
A radiologist in a lab examining a computed tomography scan of a patient.
GE Healthcare Technologies Inc. (NASDAQ:GEHC)
Number of Hedge Fund Holders: 49
GE Healthcare Technologies Inc. (NASDAQ:GEHC) is a global leader in medical technology, focusing on advanced imaging, ultrasound, and patient care solutions. The company produces a variety of healthcare products, including CT scanners, MRI machines, X-ray systems, and ultrasound devices, along with digital healthcare IT and AI-enabled technologies. GE HealthCare primarily serves hospitals, clinics, and healthcare providers worldwide.
The company is expanding its product portfolio with innovations like the LOGIQ E10 Series ultrasound featuring AI solutions, the Deep Learning portfolio for CT imaging, and real-time collaboration tools for radiology teams. Additionally, GE Healthcare is developing products for emerging markets, such as a $1,000 handheld ECG device for rural India and a portable ultrasound machine for rural China, which also have applications in developed markets. The company is forming value-based partnerships with healthcare providers to drive technological transformation, improve patient outcomes, and support long-term revenue growth.
GE Healthcare Technologies Inc. (NASDAQ:GEHC) reported revenues of $4.8 billion in Q2 2024, remaining flat year-over-year but achieving 1% organic growth driven by positive pricing and volume, despite challenges in the Chinese market. Profitability improved in Q2, with net income margin rising to 8.9% from 8.7% and adjusted EBIT margin expanding to 15.3% from 14.8%, primarily due to productivity gains and favorable pricing strategies. Diluted EPS increased to $0.93, while adjusted EPS rose to $1.00, reflecting 8.7% year-over-year growth driven by higher EBIT and lower interest expenses.
The company’s growth catalysts include strategic collaborations, such as a partnership with AWS to advance healthcare transformation using generative AI, plans to acquire a clinical AI business from Intelligent Ultrasound, the launch of new products like the MIM Symphony HDR Prostate for MR image guidance, and expanded partnerships with organizations like Tampa General Hospital to enhance patient and clinician outcomes across Florida.
As of Q2, 2024, 49 hedge funds in the Insider Monkey database held shares in the stock. GE Healthcare Technologies Inc. holds a moderate buy rating, with 12 Wall Street analysts providing 12-month price targets over the last 3 months. The average price target is $95.25, with a high of $105.00 and a low of $74.00, indicating a potential 4.28% increase from the current price of $91.34.
Overall, GEHC ranks 3rd on our list of most promising medical stocks according to hedge funds. While we acknowledge the potential of GEHC as an investment, 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 GEHC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.