We recently published a list of the 10 Best Medical Device Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Danaher Corporation (NYSE:DHR) stands against other best medical device stocks to buy right now.
Overview of the Medical Devices Sector
According to a report by Mordor Intelligence, the medical devices market has a size of $681.57 billion as of 2025. The massive industry is expected to grow at a compound annual growth rate of 6.99% between 2025 and 2030, reaching a market size of $955.49 billion by the end of the forecast period.
This significant growth can be attributed to various megatrends in the healthcare sector. The aging population worldwide is one of the primary factors affecting the industry. This is especially true in high-income countries such as the US, as around 17% of the country’s population is 65 or older as of 2023. This is causing an increase in the prevalence of chronic diseases, which is ultimately driving the demand for medical devices.
This demand is anticipated to continue growing in the coming decades. According to statistics by the United Nations, the number of people aged 65 or older is anticipated to represent around 16% of the world’s population by 2050, which translates to around 1.5 billion people worldwide. This demographic shift is anticipated to materialize especially prominently in regions such as Europe and North America, where the population of 65 or older is expected to reach 26.9% by 2050.
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Continued Growth in the US Medical Device Manufacturing Sector
In addition, technological advancements such as the increasing use of AI, predictive analysis, and advanced algorithms are metamorphosing the healthcare technology industry. While North America is the largest medical device market, Asia-Pacific is the fastest growing.
Another report by Grand View Research estimates that the market size of medical device manufacturers in the US is around $256.2 billion as of 2024. It is expected to grow at a compound annual growth rate of 5.9% between 2025 and 2030. The primary reasons behind this growth include the increasing geriatric population, the growing number of road and sports accidents, the expanding geographic reach of the key players in the market, and the rising adoption of minimally invasive procedures in the industry.
The Future of the Healthcare Industry in the US
According to McKinsey, the healthcare industry is expected to continually undergo a shift in growth dynamics. Health services and technology (HST) revenue pools are anticipated to grow at a compound annual growth rate of 8% between 2023 and 2028, supported by double-digit growth in software platforms and advanced data and analytics. The sales of innovative technologies such as generative AI to payers and providers are further supporting this growth.
In addition, pharmacy services, especially those focused on specialty pharmacy, are expected to see continued growth. The launch of new therapies and increased utilization are expected to be the primary drivers of this growth. McKinsey estimates specialty pharmacy revenue will grow at a compound annual growth rate of 8% between 2023 and 2028, growing EBITDA for managed service providers and specialty pharmacies. Therefore, optimistic trends are materializing for the healthcare industry as a whole, including the medical device sector.
Our Methodology
We sifted through stock screeners, online rankings, and ETFs to compile a list of 20 medical device stocks. We then selected the top 10 most popular stocks among elite hedge funds as of Q3 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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 healthcare professional in a lab coat holding a microscope and looking at a slide under the lens.R
Danaher Corporation (NYSE:DHR)
Number of Hedge Fund Holders: 98
Danaher Corporation (NYSE:DHR) designs, manufactures, and markets professional, medical, industrial, and commercial products and services. It operates through Diagnostics, Biotechnology, Life Sciences, and Environmental and Applied Solutions. Its Biotechnology segment offers a range of equipment and consumables for biological medicines, while the Life Diagnostics segment offers clinical instruments, devices, consumables, and other services for the diagnosis and treatment of diseases.
Danaher Corporation’s (NYSE:DHR) focus on high-margin bioprocessing in its life sciences sector is central to its growth strategy. The anticipated recovery in bioprocessing is expected to significantly increase the company’s earnings per share (EPS) in the coming years.
Strong free cash flow generation is another competitive point for the company, as it generated $5.3 billion of free cash flow in fiscal 2024. This resulted in a free cash flow to net income conversion ratio of around 135%. Danaher Corporation (NYSE:DHR) is also active in the M&A domain, completing several strategic acquisitions throughout fiscal 2024 that brought innovative solutions to the company.
Madison Sustainable Equity Fund stated the following regarding Danaher Corporation (NYSE:DHR) in its Q3 2024 investor letter:
“Danaher Corporation (NYSE:DHR) released its 2024 Corporate Sustainability Report. It highlighted several milestones across its three pillars of sustainability (building the best team, innovating products that improve lives and the planet, and protecting the environment). The company has committed to setting greenhouse gas emission reduction targets in line with the Science Based Targets initiatives (SBTi), including reaching net-zero value chain emissions by 2050.”
Overall, DHR ranks first on our list of best medical device stocks to buy according to hedge funds. While we acknowledge the potential of DHR, 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 DHR 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.
