We recently compiled a list of the 10 Best Healthcare Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Boston Scientific Corporation (NYSE:BSX) stands against the other healthcare stocks. You can also check out the 20 Most Valuable Healthcare Companies in the World here.
Healthcare stocks are often considered a defensive investment during times of economic uncertainty. This is because people typically do not cut back on essential healthcare services or prescription drug purchases, even during economic downturns. According to the Centers for Medicare and Medicaid Services (CMS), expenditure on healthcare within the United States reached an estimated $4.8 trillion in 2023 while projections for 2027-32 suggest that national care spending will grow at an average rate of 5.6%.
A report by McKinsey also predicts that the healthcare industry is expected to see significant profit growth, with the overall profit pool reaching $819 billion by 2027, up from $583 billion in 2022. As we progress through 2024, there is a growing sense of optimism surrounding the healthcare sector. BlackRock’s 2024 outlook for healthcare suggests that investors can anticipate a “favorable risk-reward environment” in the sector this year. The healthcare sector’s underperformance in the previous year has created an appealing entry point for investors seeking to invest in the sector in 2024. There are several key trends behind this favorable climate in 2024 and beyond.
Firstly, the healthcare market is undergoing a patient-centered revolution fueled by technology. Telehealth or telemedicine, a solution driven by the pandemic, is now entering the mainstream due to its convenience and accessibility. The global telemedicine market, valued at $60.15 billion in 2023, is expected to keep growing at a steady pace for the next few years. This trend aligns with a broader shift towards personalized care. Advancements in genomics are paving the way for precision medicine, which is expected to be a $50.2 billion market by 2028. Precision medicine personalizes treatments based on the patient’s genetic makeup, leading to potentially more effective interventions.
The AI revolution is also impacting the healthcare sector. According to a report by Deloitte, in 2019 and 2022, investor confidence in AI for healthcare was high, with around $31.5 billion poured into equity funding. In the US alone, wider adoption could generate annual savings of up to $360 billion, roughly 10% of the country’s healthcare spending, within the next five years.
Another key trend is the rise of remote patient monitoring (RPM). This technology allows healthcare providers to collect patients’ health data remotely and intervene early if there are any concerning changes. The global RPM market, valued at $71.9 billion in 2023, is expected to observe further growth. Wearable devices and other technologies enabling RPM are likely to see continued adoption through 2028.
Our Methodology
To shortlist the 10 best healthcare stocks to buy according to hedge funds, we conducted an analysis of our database of 919 hedge funds as of Q1 2024. From this dataset, we selected the best healthcare stocks based on the hedge fund sentiment. The top healthcare stocks have been ranked in ascending order of the number of hedge funds holding a stake in them as of the first quarter of the year. 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 surgeon examining a patient’s brain in an operating room, paramedics nearby.
Boston Scientific Corporation (NYSE:BSX)
Number of Hedge Fund Holders: 72
Boston Scientific Corporation (NYSE:BSX) is a medical device company focusing on developing minimally invasive solutions.
Boston Scientific Corporation (NYSE:BSX) experienced significant financial growth in Q1 2024. Sales increased by $467 million, reaching $3.86 billion, and net income rose year over year by 57.3%. This translated into a net profit margin of 12.81%, reflecting an over 38% year-on-year increase.
Furthermore, the company reported an earnings per share of $0.56 in Q1, surpassing the expectations of $0.51. Boston Scientific Corporation (NYSE:BSX) has managed to beat the EPS estimates consistently in the last 4 quarters.
With this performance, analysts are bullish on Boston Scientific Corporation (NYSE:BSX), with an average 12-month price target of $82.45. This price target reflects an upside potential of over 8%. This bullish sentiment is further endorsed by a recent “Buy” recommendation from Goldman Sachs.
Here’s what Baron Funds said about Boston Scientific Corporation (NYSE:BSX) in its Q1 2024 investor letter:
“Strength in the sub-industry also came from robotic surgical system leader Intuitive Surgical, Inc. and global medical device manufacturer Boston Scientific Corporation (NYSE:BSX). We remain positive about Boston Scientific because of the company’s differentiated products in electrophysiology and structural heart, double-digit EPS growth profile, proven track record of cost discipline, and consistent annual operating margin expansion.
Overall BSX ranks 10th on our list of the best healthcare stocks to buy. You can visit 10 Best Healthcare Stocks to Buy According to Hedge Funds to see the other healthcare stocks that are on hedge funds’ radar. While we acknowledge the potential of BSX 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 BSX 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.
