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 Lantheus Holdings, Inc. (NASDAQ:LNTH) 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.
READ ALSO: 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 medical professional performing a pulmonary function assessment on a patient.
Lantheus Holdings, Inc. (NASDAQ:LNTH)
Number of Hedge Fund Holders: 34
Lantheus Holdings, Inc. (NASDAQ:LNTH) is a leading radiopharmaceutical company that develops, manufactures, and commercializes diagnostic and therapeutic products for medical imaging. Their advanced imaging agents and technologies assist doctors in detecting, treating, and monitoring diseases, with a focus on cardiology and oncology.
In Q2 2024, Lantheus Holdings Inc. reported a 22.5% year-over-year revenue growth. This was largely driven by Radiopharmaceutical Oncology, which grew 29.3%, due to the continued strength of PYLARIFY, whose sales increased by 30% due to rising awareness and adoption. Precision diagnostics revenue rose by 14.9%, with DEFINITY sales up 10.7% and TechneLite revenue jumping 30.5%, driven by strong market demand.
However, strategic partnerships and other revenue declined by 31.7%, mainly due to the absence of $7 million in RELISTOR-related royalties from the previous year. Despite this, strong contributions from MK-6240 and advancements in patient care and research partnerships helped maintain overall company momentum by mid-2024.
Lantheus Holdings, Inc. (NASDAQ:LNTH) is focused on advancing treatments for Alzheimer’s disease and prostate cancer. It acquired diagnostic tools NAV-4694 and MK-6240 for early Alzheimer’s detection and secured global rights to RM2, a tool for diagnosing early-stage prostate cancer. The company also licensed two promising drug candidates from Radiopharm Theranostics.
Lantheus has delivered a remarkable 306% return over three years, driven by strong financial performance, including its recent transition to earnings per share of $1.80 in Q2 2024. This growth, along with the company’s positive momentum, positions it as a promising investment opportunity.
ClearBridge Small Cap Value Strategy stated the following regarding Lantheus Holdings, Inc. (NASDAQ:LNTH) in its Q2 2024 investor letter:
“Health care results lifted relative performance during the period and included our top two individual performers in Lantheus and newer portfolio addition Corcept Therapeutics. Lantheus Holdings, Inc. (NASDAQ:LNTH), which makes diagnostic and therapeutic products that help clinicians diagnose and treat heart, cancer, and other diseases, saw its share price rise on strong first-quarter results.”
Overall, LNTH ranks 8th on our list of most promising medical stocks according to hedge funds. While we acknowledge the potential of LNTH 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 LNTH 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.
