The MedTech sector is transforming modern healthcare through the integration of AI, cloud computing, and the Internet of Medical Things (IoMT), which facilitates personalized and remote patient care. This surge in demand is fueled by the ability of these technologies to enhance outcomes, lower costs, and improve access to care.
As MedTech continues to drive healthcare innovation, adding fundamentally strong MedTech stocks like Boston Scientific Corporation (BSX), Stryker Corporation (SYK), and Abbott Laboratories (ABT) to one’s portfolio could be a smart move for solid gains.
The optimism in the MedTech market is driven by advancements in quality patient care through telemedicine, digital therapeutics, bioprinting, biometric wearables, digital health technology, and 3D printing. These innovations enhance patient monitoring, remote care, and personalized treatment. Hence, the sector’s growth prospects remain robust, offering promising investment opportunities.
Notably, the global medical devices market is projected to reach $886.80 billion by 2032, growing at an impressive CAGR of 6.3%. This robust demand for MedTech is driven by the need for advanced diagnostic tests fueled by an aging population and ongoing advancements in medical technologies.
Meanwhile, AI has transformed MedTech by introducing algorithms for early disease detection and diagnosis and by enhancing diagnostic accuracy through advanced image analysis. Additionally, MedTech improves treatment precision and surgical procedures, resulting in better patient outcomes. The global AI in medical devices market is expected to reach $97.07 billion by 2028, growing at a 44.4% CAGR.
Considering these conducive trends, let’s analyze the fundamentals of the three Medical - Devices & Equipment picks mentioned above, beginning with the third choice.
Stock #3: Boston Scientific Corporation (BSX)
BSX develops, manufactures, and markets medical devices for use in various interventional medical specialties worldwide. It operates through two segments, MedSurg and Cardiovascular.
On June 18, 2024, BSX announced an agreement to acquire Silk Road Medical, adding innovative stroke prevention technology to its vascular portfolio. The transaction is valued at approximately $1.16 billion.
In terms of the trailing-12-month EBITDA margin, BSX’s 25.92% is 338% higher than the 5.92% industry average. Likewise, its 0.43x trailing-12-month asset turnover ratio is 4.1% higher than the 0.41x industry average. Its 17.86% trailing-12-month EBIT margin is 658.5% higher than the 2.35% industry average.
During the second quarter that ended June 30, 2024, BSX’s net sales increased 14.5% year-over-year to $4.12 billion. Its adjusted gross profit rose 11.9% over the prior-year quarter to $2.90 billion. Similarly, its net income attributable to BSX common stockholders and impact per share stood at $914 million and $0.62, up 17.6% and 17% year-over-year, respectively.
Street expects BSX’s EPS and revenue for the quarter ending September 30, 2024, to increase 17.7% and 14.5% year-over-year to $0.59 and $4.04 billion, respectively. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 56.8% to close the last trading session at $78.68.
BSX’s POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #38 out of 132 stocks in the Medical - Devices & Equipment industry. It has an A grade for Sentiment and a B for Growth and Stability. Click here to see BSX’s ratings for Value, Momentum, and Quality.
Stock #2: Stryker Corporation (SYK)
SYK operates as a medical technology company. The company operates through two segments: MedSurg and Neurotechnology, and Orthopaedics and Spine.
On August 12, 2024, SYK announced a definitive agreement to acquire care.ai, a company specializing in AI-assisted virtual care and ambient intelligence solutions, to enhance its healthcare IT and connected medical device portfolio.
In terms of the trailing-12-month EBIT margin, SYK’s 20.71% is 779.6% higher than the 2.35% industry average. Similarly, its 0.56x trailing-12-month asset turnover ratio is 35.1% higher than the 0.41x industry average. Moreover, its 10.29% trailing-12-month levered FCF margin is 744.5% higher than the 1.22% industry average.
In the second quarter that ended on June 30, 2024, SYK’s net sales increased 8.5% year-over-year to $5.42 billion. Likewise, its adjusted gross profit grew 9.1% from the year-ago value to $3.48 billion.
SYK’s adjusted operating income was $1.33 billion, an increase of 9.7% from the previous year’s period. In addition, the company’s net earnings and adjusted EPS amounted to $1.09 billion and $2.81, up 11.2% and 10.6% year-over-year, respectively.
For the quarter ending September 30, 2024, SYK’s EPS and revenue are expected to increase 12.6% and 9.4% year-over-year to $2.77 and $5.37 billion, respectively. SYK surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 22.7% to close the last trading session at $341.06.
SYK’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
SYK has a B grade for Growth, Stability, and Sentiment. It is ranked #30 in the same industry. Click here to access additional ratings of SYK for Value, Momentum, and Quality.
Stock #1: Abbott Laboratories (ABT)
ABT and its subsidiaries discover, develop, manufacture, and sell healthcare products worldwide. They operate in four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.
On August 7, 2024, ABT announced a global partnership with Medtronic to integrate its FreeStyle Libre continuous glucose monitoring system with Medtronic’s insulin delivery devices, enhancing diabetes management.
On June 6, 2024, ABT announced it received CE Mark in Europe for the AVEIR DR, the world’s first dual chamber leadless pacemaker system, designed to treat abnormal heart rhythms with innovative synchronized communication technology.
In terms of the trailing-12-month Capex / Sales, ABT’s 5.52% is 65.5% higher than the 3.3% industry average. Its 13.23% trailing-12-month levered FCF margin is 985.6% higher than the 1.22% industry average. Also, its 17.98% trailing-12-month EBIT margin is 663.7% higher than the 2.35% industry average.
For the first half that ended on June 30, 2024, ABT’s net sales rose 3.1% year-over-year to $20.34 billion. Its operating earnings grew marginally from the year-ago value to $3.06 billion. In addition, the company’s adjusted net earnings stood at $3.73 billion, or $2.12 per share, representing a marginal increase year-over-year.
Analysts expect ABT’s EPS and revenue for the quarter ending September 30, 2024, to increase 5.3% and 3.9% year-over-year to $1.20 and $10.53 billion, respectively. It surpassed Street EPS and revenue estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 12.4% to close the last trading session at $111.90.
ABT’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Stability and Sentiment. Within the Medical - Devices & Equipment industry, it is ranked #22. To see ABT’s Growth, Value, Momentum, and Quality rating, click here.
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ABT shares were trading at $110.78 per share on Tuesday afternoon, down $1.12 (-1.00%). Year-to-date, ABT has gained 2.17%, versus a 18.45% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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