The medical device industry garnered significant investor attention amid the COVID-19 pandemic. And with worldwide COVID-19 cases again on the rise, the industry may gain renewed traction with investors. According to WHO, more than 11 million new COVID-19 infections were registered last week, representing an 8% increase.
Furthermore, an increased number of patients with chronic diseases globally, along with an aging population that continues to grow, should lead to a continuing increase in demand for medical devices. Investors’ interest in this space is evidenced by the iShares U.S. Medical Devices ETF’s (IHI) 10.5% returns over the past year.
Therefore, we think the stocks of fundamentally strong medical device companies ICU Medical, Inc. (ICUI) and Natus Medical Incorporated (NTUS), which are currently trading at discounts to their peers, could be solid bets for now. These stocks are rated Strong Buy in our property POWR Ratings system.
Click here to checkout our Healthcare Sector Report for 2022
ICU Medical, Inc. (ICUI)
Clemente, Calif.-based ICUI, together with its subsidiaries, develops, manufactures, and sells medical devices used in infusion therapy and critical care applications worldwide. It is a global leader in infusion systems, infusion consumables, and high-value critical-care products used in hospitals, alternate sites, and home care settings.
On January 6, 2022, ICUI completed its acquisition of Smiths Medical from Smiths Group plc. Vivek Jain, ICUI’s chairman and CEO said, “We are pleased that Smiths Medical is now part of ICU Medical, and we welcome our new Smiths colleagues to the ICU team. We look forward to working together to continue providing quality, innovation, and value to our clinical customers worldwide.”
For the fourth quarter, ended Dec. 31, 2021, ICUI’s total revenues came in at $340.52 million, up 6.3% year-over-year. Its gross profit increased 6.4% year-over-year to $127.49 million. Also, its adjusted EPS was $1.82, up 2.8% year-over-year.
ICUI’s 2.33x forward P/S is 55.5% lower than the 5.24x industry average. Also, its 25.35% forward revenue growth is 82.1% higher than the 13.93% industry average.
ICUI’s revenue is expected to increase 81.9% to $2.39 billion in its fiscal 2022. Its EPS is expected to increase 30.6% year-over-year to $9.65 in 2022. It has surpassed EPS estimates in each of the four trailing quarters. The stock has gained 12.1% in price over the past month to close yesterday’s trading session at $246.60.
ICUI’s POWR Ratings reflect its promising outlook. It has an overall A rating representing a Strong Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
ICUI has a B grade for Growth, Value, Stability, and Quality. It is ranked #8 of 168 stocks in the Medical - Devices & Equipment industry. Click here to see the additional POWR Ratings for ICUI (Momentum and Sentiment).
Natus Medical Incorporated (NTUS)
NTUS in Pleasanton, Calif., provides medical device solutions to diagnose and treat central nervous and sensory system disorders worldwide. On Feb. 24, 2022, Thomas J. Sullivan, NTUS’ President and CEO said, “Throughout the year we focused on ensuring our products were available to clinicians and despite incurring over $1.7 million in higher costs in the fourth quarter alone, our non-GAAP earnings per share increased more than 200%.”
For its fiscal fourth quarter, ended Dec. 31, 2021, NTUS’ revenue increased 8.4% year-over-year to $128.66 million. In addition, its non-GAAP net income came in at $16.19 million, up 24% year-over-year, while its non-GAAP EPS came in at $0.47, up 20.5% year-over-year.
NTUS’ 1.78x forward P/S is 66.1% lower than the 5.24x industry average. Also, its 215.53% year-over-year EBITDA growth is significantly higher than the 19.31% industry average.
NTUS’ revenue is expected to come in at $495 million in its fiscal year 2022, representing a 4.6% year-over-year rise. Furthermore, its EPS is also expected to grow 22% per annum for the next five years. Over the past month, the stock has gained 12.7% in price to close yesterday’s trading session at $25.78.
It is no surprise that NTUS has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Growth and Value and a B grade for Quality.
NTUS is ranked #2 in the Medical - Devices & Equipment industry. Click here to see the additional POWR Ratings for NTUS (Momentum, Stability, and Sentiment).
Click here to checkout our Healthcare Sector Report for 2022
ICUI shares were trading at $244.62 per share on Friday afternoon, down $1.98 (-0.80%). Year-to-date, ICUI has gained 3.07%, versus a -7.06% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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