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 Glaukos Corporation (NYSE:GKOS) 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 doctor examining a patient’s eyes with an ophthalmic medical device.
Glaukos Corporation (NYSE:GKOS)
Price Target Upside: 27.90%
Glaukos Corporation (NYSE:GKOS) is a medical technology company focused on innovative treatments for eye diseases like glaucoma, corneal disorders, and retinal diseases. The company develops micro-invasive surgical devices and drug delivery systems to improve patient outcomes. Key products include the iStent and iStent inject W micro-bypass stents for treating open-angle glaucoma and the iDose TR, an intracameral implant that delivers glaucoma medication for up to three years.
Glaukos Corporation (NYSE:GKOS) reported a strong performance in Q4 2024, with net sales reaching $105.5 million, a 28% increase year-over-year. Full-year 2024 sales totaled $383.5 million, up 22% from 2023, and the company expects continued growth with a projected sales range of $475 to $485 million for 2025. The growth was mainly driven by the success of iDose TR, a novel glaucoma therapy, which saw record sales in Q4. This dropless treatment is gaining popularity for its ability to improve patient outcomes.
Glaukos Corporation (NYSE:GKOS) faces potential challenges, such as foreign currency fluctuations, competition in international markets, reimbursement issues, and the expiration of the Hydros royalty, which may affect revenues outside of iDose TR. Despite these hurdles, the company is seen as a leader in the glaucoma market, with promising prospects for further growth in the ophthalmology sector.
Overall GKOS ranks 5th on our list of the best medical technology stocks to buy according to analysts. While we acknowledge the potential of GKOS 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 GKOS 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.