We recently compiled a list of the 7 Best Medical Technology Stocks To Buy According To Analysts. In this article, we are going to take a look at where Bio-Rad Laboratories, Inc. (NYSE:BIO) stands against the other medical technology stocks.
Growth and Drivers of the Global MedTech Market
The MedTech sector is crucial in healthcare, which concentrates on the creation of medical devices aimed at enhancing disease prevention, diagnosis, and treatment. Prominent products in this field include well-known devices like pacemakers, imaging equipment, dialysis machines, and a range of implants.
A study by Mordor Intelligence estimates that the medical equipment market will be worth $681.57 billion by 2025. The enormous industry is anticipated to reach a market value of $955.49 billion by the end of the forecast period, growing at a compound yearly growth rate of 6.99% between 2025 and 2030.
Numerous megatrends in the healthcare industry are to blame for this considerable expansion. One of the main elements influencing the sector is the aging of the global population. This is particularly true in wealthy nations like the US, where, as of 2023, 17% of the population is 65 years of age or older. The demand for medical equipment is ultimately being driven by the rise in the prevalence of chronic diseases.
In the ensuing decades, this need is expected to keep increasing. The United Nations estimates that by 2050, there will be more than 1.5 billion individuals worldwide who are 65 years of age or older, accounting for about 16% of the global population. In regions like Europe and North America, where the proportion of people 65 and older is predicted to reach 26.9% by 2050, this demographic change is likely to manifest particularly strongly.
Transformations and Growth Drivers in Healthcare IT and Medical Devices
Furthermore, the healthcare IT sector is undergoing a transformation due to technological developments including the growing application of AI, predictive analysis, and sophisticated algorithms. Asia-Pacific is the medical device market with the greatest rate of growth, although North America still holds the largest share.
According to a different Grand View Research analysis, the US medical device manufacturing market is expected to reach a value of approximately $256.2 billion by 2024. Between 2025 and 2030, it is anticipated to expand at a compound annual growth rate of 5.9%. The growing frequency of traffic and sports accidents, the aging population, the geographic expansion of the major market participants, and the increased use of minimally invasive procedures in the sector are the main causes of this growth.
McKinsey predicts that the growth dynamics of the healthcare sector will continue to change. Between 2023 and 2028, it is projected that revenue pools related to health services and technology (HST) would expand at a compound annual growth rate of 8%, driven by double-digit growth in software platforms and advanced data and analytics. This expansion is also being supported by the selling of cutting-edge technologies to payers and providers, such as generative AI.
Additionally, it is anticipated that pharmaceutical services—particularly those pertaining to specialty pharmacy—will continue to expand. Increased use and the introduction of novel treatments are anticipated to be the main forces behind this expansion. According to McKinsey, between 2023 and 2028, specialty pharmacy revenue is expected to increase at a compound annual growth rate of 8%, which will increase managed service providers’ and specialty pharmacies’ EBITDA.
Our Methodology
For this list, we selected stocks with an analyst upside of 20%-50%, a market capitalization of over $2 billion, institutional ownership above 40%, and low short interest. We then ranked these stocks based on their analyst upside.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A medical laboratory technician in protective gear working with a laboratory instrument.
Bio-Rad Laboratories, Inc. (NYSE:BIO)
Price Target Upside: 47.82%
Bio-Rad Laboratories, Inc. (NYSE:BIO) is a global leader in creating innovative products for life science research and clinical diagnostics. The company develops instruments, software, consumables, reagents, and content for applications in areas like cell biology, gene expression, protein purification, and clinical diagnostics.
Bio-Rad Laboratories, Inc. (NYSE:BIO)’s Q4 2024 results show a mixed performance, with net sales declining by 2% year-over-year to $668 million. The Clinical Diagnostics Group saw a slight increase of 0.9%, driven by strong demand for quality control and blood typing products. Gross margin decreased to 51.2%, impacted by restructuring and changes in reimbursement in China. Operating income fell to $58 million, while the company reported a significant net loss of $716 million, mainly due to a $977 million loss from changes in the fair market value of Sartorius AG shares.
On a positive note, their non-GAAP results showed a gross margin of 53.9%, and non-GAAP net income was $81 million, or $2.90 per share. For the full year, the corporation’s net sales were $2.567 billion, a 3.9% decline from 2023. Despite the challenges, Bio-Rad Laboratories, Inc. (NYSE:BIO), one of the best medical technology stocks, is actively managing costs to improve future profitability. Additionally, the company has made a binding offer to acquire Stilla Technologies, which will enhance its digital PCR portfolio and strengthen its position in applied research and clinical diagnostics.
Overall BIO ranks 1st on our list of the best medical technology stocks to buy according to analysts. While we acknowledge the potential of BIO 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 time frame. If you are looking for an AI stock that is more promising than BIO 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.
