Increasing investment in medical development is offering lucrative growth opportunities for the industry. Therefore, quality medical stocks, Agilent Technologies, Inc. (A), Bruker Corporation (BRKR), and Semler Scientific, Inc. (SMLR), could be ideal buys. These stocks are A (Strong Buy) rated in our POWR Ratings system.
An increasing number of initiatives and growing support by various governments in favor of medical industry, growing adoption of medical tourism in developing countries, and rising usage of wearable medical devices are promoting the growth of the medical devices market.
The global medical devices market is expected to grow at a CAGR of 4.9% until 2023.
Also, the growing adoption of automated platforms for disease prevention, detection, and management, represents one of the key factors driving the market. Apart from this, healthcare providers' increasing utilization of clinical diagnostics to develop targeted therapies through specific and sensitive diagnostic tests is bolstering the market's growth.
The global clinical diagnostics market is expected to reach $124.70 billion by 2028, exhibiting a CAGR of 8.6% until 2028.
In addition, the increasing penetration of smartphones, along with numerous smartphone applications related to health and fitness across the globe, is expected to be a key factor driving the digital health market growth. Rapid investment in the healthcare IT infrastructure, particularly in developing and developed nations estimated to be conducive to market expansion.
The global digital health market is expected to be $939.54 billion by 2032, growing at a CAGR of 13.1% until 2032.
Let’s discuss the stocks mentioned above in detail:
Agilent Technologies, Inc. (A)
A provides application focused solutions to the life sciences, diagnostics, and applied chemical markets worldwide.
On June 8, 2023, A announced the release of the Agilent BioTek 406 FX washer dispenser, a compact instrument that combines multifunctional reagent dispensing and plate-washing capabilities. The BioTek 406 FX offers expanded liquid handling features designed for integration into automated systems and standalone benchtop use.
On June 5, A announced a highly-anticipated, complete workflow solution for targeted per- and polyfluoroalkyl substances (PFAS) analysis using the United States (US) Environmental Protection Agency (EPA) Method 1633 (3rd draft). EPA Draft Method 1633 currently analyzes 40 PFAS compounds in wastewater and soil and is a complex and labor-intensive method, relying on multiple sample preparation and analysis steps.
A’s trailing-12-month asset turnover ratio of 0.66x is 89.7% higher than the 0.35x industry average. Its trailing-12-month EBITDA margin of 29.25% is 728.3% higher than the 3.53% industry average.
On May 17, A announced a quarterly dividend of $0.23, payable on July 26, 2023.
A pays $0.90 annually as dividends which translates to a yield of 0.75% at the current price level. Its four-year average dividend yield is 0.67%. Its dividend payouts have grown at an 8.1% CAGR over the past three years.
A’s net revenue rose 6.8% year-over-year to $1.72 billion in the fiscal second quarter that ended April 30, 2023. Non-GAAP net income increased 10.9% year-over-year to $377 million. Non-GAAP earnings per share increased 12.4% year-over-year to $1.27.
Analysts expect A’s revenue to be $1.66 billion for the fiscal third quarter ending July 2023. Its EPS is expected to increase 2% year-over-year to $1.37 for the same quarter.
The stock has gained marginally intra-day to close the last trading session at $119.42.
A’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
A has a B grade for Value and Quality. It is ranked #3 out of 51 stocks in the Medical - Diagnostics/Research industry.
Click here to see A’s additional POWR Ratings for Growth, Momentum, Stability, and Sentiment.
Bruker Corporation (BRKR)
BRKR develops, manufactures, and distributes scientific instruments, and analytical and diagnostic solutions in the United States and internationally. The company operates through four segments, Bruker Scientific Instruments (BSI) BioSpin; BSI CALID; BSI NANO; and Bruker Energy & Supercon Technologies.
On June 5, 2023, BRKR announced transformative sensitivity on the 4D-Proteomics timsTOF platform with the launch of the new timsTOF Ultra mass spectrometer. It incorporates a new Captive Spray Ionization (CSI) Ultra ion source with larger capillary and optimized vortex gas flow, a novel 4th-generation TIMS (trapped ion mobility separation) XR cell, and 14bit digitizer.
The timsTOF Ultra can identify over 55K peptides that map into 5000 protein groups at the single-cell level of 0.125 ng protein loading, at 1% FDR, and over 4800 protein groups quantified at CVs of <20%.
BRKR’s trailing-12-month asset turnover ratio of 0.55x is 57.6% higher than the 0.35x industry average. Its trailing-12-month EBITDA margin of 21.86% is 519.2% higher than the 3.53% industry average.
On June 16, BRKR paid a quarterly dividend of $0.05. BRKR pays $0.20 annually as dividends which translates to a yield of 0.27% at the current price. Its four-year average dividend yield is 0.30%. Its dividend payouts have grown at 7.7% CAGR over the past three years.
During the fiscal first quarter ended March 31, 2023, BRKR’s revenue increased 27.5% year-over-year to $685.30 million. Non-GAAP net income attributable to BRKR increased 27.5% year-over-year to $95.10 million, while its non-GAAP earnings per share increased 30.6% year-over-year to $0.64.
BRKR’s revenue is expected to increase 10.1% year-over-year to $648.05 million for the fiscal second quarter ending June 2023. Its EPS is expected to increase 7.6% year-over-year to $0.48 in the same quarter. Also, it has surpassed revenue estimates in three of the trailing four quarters, which is impressive.
Shares of BRKR have gained 4.7% over the past nine months to close the last trading session at $72.83.
BRKR’s robust prospects are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
The stock has an A grade for Growth and a B in Value, Stability, and Quality. It is ranked #2 in the same industry.
Beyond what is stated above, we’ve also rated BRKR for Momentum and Sentiment. Get all BRKR ratings here.
Semler Scientific, Inc. (SMLR)
SMLR provides technology solutions to improve the clinical effectiveness and efficiency of healthcare providers in the United States.
SMLR’s trailing-12-month asset turnover ratio of 0.97x is 177.2% higher than the 0.35x industry average. Its trailing-12-month EBITDA margin of 32.35% is 816.2% higher than the 3.53% industry average.
SMLR’s revenues increased 29.9% year-over-year to $18.21 million for the fiscal first quarter that ended March 31, 2023. Net income increased 47.9% year-over-year to $4.97 million and net income per share increased 48% year-over-year to $0.74.
Street expects SMLR’s revenue to increase 7.9% year-over-year to $16 million in the fiscal second quarter (ending June 2023). Its EPS is expected to increase 9.8% year-over-year to $0.56 for the same quarter. Additionally, it has topped consensus EPS estimates in each of the trailing four quarters.
The stock declined 2.3% over the past three months to close its last trading session at $25.14.
It’s no surprise that SMLR has an overall rating of A, which translates to a Strong Buy in our POWR Ratings system.
SMLR also has a B grade for Value, Growth, Sentiment, and Quality. It is ranked first in the same industry.
For additional ratings for SMLR for Momentum and Stability, click here.
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A shares were trading at $119.34 per share on Monday morning, down $0.08 (-0.07%). Year-to-date, A has declined -20.12%, versus a 14.01% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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