The medical industry is navigating an exciting landscape marked by unprecedented demographic shifts, widespread technological advancement, surging medical expenses, and escalating risk of chronic diseases. This dynamic landscape presents a spectrum of opportunities for the companies operating within this space.
Given the promising backdrop, this article sheds light on the fundamentals of three sound medical stocks, Abbott Laboratories (ABT), Agilent Technologies, Inc. (A), and Viemed Healthcare, Inc. (VMD), which might be well-equipped to capitalize on the industry prospects.
The medical industry is anticipated to experience continued growth and demand, primarily driven by the increasing prevalence of chronic diseases. According to the World Health Organization (WHO), these diseases account for 74% of all global fatalities, causing 41 million deaths annually.
In the face of the escalating burden of chronic diseases on a global scale, the medical industry is experiencing a transformative propelled by technological breakthroughs. For instance, leveraging technologies such as Artificial Intelligence (AI) and Machine Learning (ML) has allowed the industry to offer more efficient healthcare outcomes.
According to a survey conducted by Morgan Stanley Research, 94% of healthcare companies acknowledge the integration of AI/ML in their operations. Moreover, the industry's average estimated budget allocation to these transformative technologies is anticipated to rise, increasing from 5.7% in 2022 to a projected 10.5% in 2024.
With AI being a pivotal element in the modern medical industry, the global AI in the healthcare market is anticipated to reach $427.50 billion by 2032, demonstrating a staggering 44% CAGR from 2022 to 2032.
Furthermore, the heightened risk of chronic diseases, surging medical costs, and technological breakthroughs have spurred the demand for innovative medical devices and equipment. According to Statista, revenue in the global medical devices market is projected to hit a whopping $511.20 billion in 2024 and reach $638 billion by 2028, growing at a CAGR of 5.7% spanning 2024 to 2028.
Overall, the convergence of the aforementioned factors underscores the growing need for advanced medical services and solutions, positioning the medical industry in a favorable spot. With that being said, let’s now explore the fundamentals of the featured medical stocks in detail:
Abbott Laboratories (ABT)
ABT discovers, develops, manufactures, and sells healthcare products worldwide. It operates in four segments: Established Pharmaceutical Products; Diagnostic Products; Nutritional Products; and Medical Devices.
On December 15, 2023, ABT declared a quarterly dividend of $0.55 per share, payable to its shareholders on February 15, 2024. This dividend payment marks a notable 7.8% increase from its previous quarterly dividend.
The company’s annual dividend of $2.20 translates to a 1.93% yield on the prevailing prices, while its four-year average dividend yield is 1.60%. Its dividend payouts have grown at CAGRs of 10.8% and 12.4% over the past three and five years, respectively.
On November 2, 2023, ABT obtained approval from the U.S. Food and Drug Administration (FDA) for “Alinity m High-Risk (HR) HPV assay,” ABT’s robust molecular screening solution designed for human papillomavirus (HPV).
The Alinity m High-Risk (HR) HPV assay has received approval both as a diagnostic test for detecting HPV and for its utilization in routine cervical cancer screening, aligning with established professional medical guidelines.
For the fiscal third quarter, which ended on September 30, 2023, ABT’s net sales amounted to $10.14 billion, while its operating earnings stood at $1.65 billion. In addition, the company’s net earnings came in at $1.44 billion and $0.82 per share, up marginally year-over-year, respectively.
Analysts predict ABT’s revenue for the fiscal fourth quarter (ended December 2023) to increase marginally year-over-year to $10.19 billion, while its EPS for the same quarter is expected to come in at $1.19, reflecting a 15.5% year-over-year increase.
Moreover, the company has an excellent surprise history, surpassing the revenue and EPS estimates in each of the trailing four quarters.
ABT’s shares have soared 19.3% over the past three months to close the last trading session at $114.02.
ABT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Growth, Stability, and Sentiment. In the 144-stock Medical - Devices & Equipment industry, it is ranked #9. Click here to see ABT’s ratings for Value, Momentum, and Quality.
Agilent Technologies, Inc. (A)
A provides application focused solutions to the life sciences, diagnostics, and applied chemical markets worldwide. The company operates in three segments: Life Sciences and Applied Markets; Diagnostics and Genomics; and Agilent CrossLab.
On January 5, 2024, A announced its inclusion in both the Dow Jones Sustainability World Index and the North America Index, underscoring the company's robust performance in Environmental, Social, and Governance (ESG) aspects.
Neil Rees, the head of A’s ESG programs, expressed pride in the company's recognition for the ninth consecutive year. He highlighted the team's achievements in emission reduction across the value chain and the delivery of innovative solutions to assist customers in achieving their environmental objectives.
On November 15, 2023, A declared a quarterly dividend of $0.25 per share, payable to its shareholders on January 24, 2024. This dividend reflects a 5% increase from the previous quarterly dividend.
The company’s annual dividend of $0.94 translates to a 0.74% yield on the prevailing prices, while its four-year average dividend yield is 0.65%. Its dividend payouts have grown at CAGRs of 7.5% and 8.3% over the past three and five years, respectively.
For the fiscal fourth quarter, which ended on October 31, 2023, A’s net revenue amounted to $1.69 billion, while its income from operations stood at $408 million.
Moreover, the company’s net income and net income per share came in at $475 million and $1.62, up 29.1% and 31.7% from the year-ago value, respectively. During the same quarter, its cash and cash equivalents stood at $1.59 billion, increasing 50.9% compared to $1.05 billion as of October 31, 2022.
Street expects A’s revenue and EPS for the fiscal 2024 first quarter (ending January 2024) to come in at $1.59 billion and $1.23, respectively. Furthermore, its EPS is projected to improve by 7.7% annually over the next five years.
Additionally, the company topped its revenue and EPS estimates in each of the trailing four quarters, which is impressive.
The stock has surged 20.1% over the past three months to close the last trading session at $130.46.
A’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
It has a B grade for Value and Quality. Within the 46-stock Medical - Diagnostics/Research industry, it is ranked #8. Click here to see the other ratings of A for Growth, Momentum, Stability, and Sentiment.
Viemed Healthcare, Inc. (VMD)
VMD provides in-home Durable Medical Equipment (DME) and post-acute respiratory healthcare services to patients in the United States. In addition, it provides neuromuscular care and oxygen therapy services.
On December 7, 2023, VMD announced that it obtained approval from the Toronto Stock Exchange (TSX) for the voluntary delisting of its common shares from the TSX. However, this move will not impact the company's continued listing on the NASDAQ Capital Market.
VMD’s Chief Operating Officer, Todd Zehnder, emphasized that this delisting is a strategic initiative aimed to establish a centralized marketplace for VMD’s common shares, with the goal of improving long-term liquidity on NASDAQ and delivering heightened value to shareholders.
In the fiscal third quarter, which ended on September 30, 2023, VMD’s revenue increased 38.2% year-over-year to $49.40 million, while its gross profit rose 41.2% from the year-ago value to $30.56 million.
The company’s net income grew 176.7% and 133.3% from the prior-year quarter to $2.92 million and $0.07 per share, respectively. Furthermore, during the same period, its total assets stood at $149.40 million, up 27.6% compared to $117.04 million as of December 31, 2022.
The consensus revenue estimate of $50.45 million for the fiscal fourth quarter (ended December 2023) represents a 34.5% year-over-year improvement. Meanwhile, the consensus EPS estimate of $0.09 for the same quarter reflects a 50% year-over-year rise.
Over the past three months, the stock has gained 15.8% to close the last trading session at $7.62.
It’s no surprise that VMD has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. It has an A grade for Quality and a B for Growth and Sentiment. Out of 67 stocks in the Medical - Services industry, it is ranked #2.
In addition to the POWR Ratings we’ve stated above, we also have VMD’s ratings for Value, Momentum, and Stability. Get all VMD ratings here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
ABT shares were trading at $114.00 per share on Friday morning, down $0.02 (-0.02%). Year-to-date, ABT has gained 4.07%, versus a 0.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Mukherjee
Anushka's ultimate aim is to equip investors with essential knowledge that empowers them to make well-informed investment choices and attain sustained financial prosperity in the long run.
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