In this piece, we will take a look at the twelve best medical device stocks to buy now. If you want to skip our introduction to the industry and jump to the top five stocks in this list, then take a look at 5 Best Medical Device Stocks To Buy Now.
The outset of the coronavirus pandemic and the rapid growth in manufacturing technology over the recent years has led to renewed investor interest and renewed fortunes for healthcare companies that have fresh funds and new technological avenues available to them for development.
This industry is divided into several sectors, one of which is the medical devices segment. To understand which companies make up the medical device industry, a definition by the Food and Drug Administration (FDA) is suitable, as it states that a medical device is any "instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory" that is used in relation to diseases.
Naturally, this covers a wide variety of objects, from simple ones such as syringes to more complicated ones such as heart stents. According to data from SelectUSA, there are more than 6,000 medical device companies in the United States, and the bulk of these are small to medium enterprises (SMEs). As far as the industry goes, several market research reports paint an optimistic picture and positive compounded annual growth rates (CAGRs) for the industry.
For instance, BCC Research estimates that the industry was worth $605 billion in 2020 and it will grow at a 5.6% CAGR to stand at $796 billion as 2025 comes to an end. Similarly, Fortune Business Insights believes that the market was worth $488 billion in 2021 and it will grow at a 5.5% CAGR to be worth $718 billion in 2029. Finally, Zion Market Research outlines that a small segment of the medical devices market, which deals primarily with smart devices such as those capable of connecting with each other and with the Internet, will be worth $48 billion by the end of 2028, growing at a CAGR of 10.9% and nearly doubling its value of $26 billion in 2021.
Therefore, the medical devices market is a strong subsegment of the broader healthcare industry, and in this list, we've identified some of the strongest companies in the industry. Out of these, some companies that are likely to cross your mind should include Johnson & Johnson (NYSE:JNJ), Abbott Laboratories (NYSE:ABT), and Medtronic plc (NYSE:MDT).
In order to sift out some of the top medical device companies, we took a broader look at the industry to identify relevant trends. Then, the firms that can end up benefiting from these were identified. After this, they were ranked through hedge fund interest gathered through Insider Monkey's survey of 912 funds for Q1 2022.
12 Best Medical Device Stocks To Buy Now
12. IRIDEX Corporation (NASDAQ:IRIX)
Number of Hedge Fund Holders: 3
IRIDEX Corporation (NASDAQ:IRIX) is an ophthalmic medical technology company that sells products such as laser systems, delivery devices, and other platforms to treat eye diseases. It is based in Mountain View, California, United States. IRIX ranks 12th in our list of best medical device stocks to buy now.
IRIDEX Corporation (NASDAQ:IRIX)'s strongest factor is the fact that it is developing a treatment for glaucoma. This eye disease currently has no treatment options, and IRIDEX Corporation (NASDAQ:IRIX)'s treatment involves inserting an implant into the eye which then automatically relieves pressure. Another laser-based glaucoma treatment from the company gained regulatory approval in China in June 2022.
Insider Monkey scanned 912 hedge fund portfolios for this year's first quarter and discovered that 3 had held a stake in IRIDEX Corporation (NASDAQ:IRIX).
Out of these, Jim Simons's Renaissance Technologies is IRIDEX Corporation (NASDAQ:IRIX)'s largest investor. It has a $2.5 million stake that comes through 546,812 million shares.
IRIDEX Corporation (NASDAQ:IRIX) joins Abbott Laboratories (NYSE:ABT), Johnson & Johnson (NYSE:JNJ), and Medtronic plc (NYSE:MDT) in the list of some of the top medical devices stocks out there.
11. Abiomed, Inc. (NASDAQ:ABMD)
Number of Hedge Fund Holders: 24
Abiomed, Inc. (NASDAQ:ABMD) is an American company headquartered in Danvers, Massachusetts that focuses on developing medical devices for the heart. These include heart and flow pumps, and the firm also offers other technological solutions such as a cloud platform.
Abiomed, Inc. (NASDAQ:ABMD) is a leader in its space and the company is on track to developing what will be the world's smallest heart pump, measuring 3.5 millimeters in diameter. The firm is also developing an industry leading treatment for acute decompensated heart failure (ADHF), after acquiring another firm last year. Additionally, the global heart pump market has a 15% CAGR estimate up to 2027, making Abiomed, Inc. (NASDAQ:ABMD) a key player in a large market.
Insider Monkey's Q1 2022 survey of 912 hedge funds revealed that 24 had bought the company's shares.
Out of these, Jim Simons's Renaissance Technologies is the company's largest investor as it owns 1.4 million shares that are worth $468 million.
10. Penumbra, Inc. (NYSE:PEN)
Number of Hedge Fund Holders: 29
Penumbra, Inc. (NYSE:PEN) offers a host of medical devices such as thrombectomy systems, revascularization devices, and neurovascular embolization coiling systems. It is headquartered in Alameda, California, United States.
Penumbra, Inc. (NYSE:PEN) targets several valuable medical device markets such as that of coronary vessel occlusion. On this front, the company's CAT Rx catheter showed impressive performance in a 2021 test that saw it post zero device related adverse events in patients and a blush grade of 3 (widely thought of as the standard for normal) in 100% of the patients.
RBC Capital set an Outperform rating and a $195 share price target for Penumbra, Inc. (NYSE:PEN) in July 2022, stating that the firm is a key player in an underdeveloped market with huge potential. Insider Monkey's 912 hedge fund survey for this year's first quarter outlined that 29 had held a stake in the company. PEN ranks 10th in our list of best medical device stocks to buy now.
Penumbra, Inc. (NYSE:PEN)'s largest investor is Ken Griffin's Citadel Investment Group which owns 367,149 shares that are worth $81 million.
“Our aversion toward early-stage biotech proved productive as did our approach of emphasizing the enablers and selected, profitable medical technology companies. Strong contributors during the fourth quarter included Penumbra, a developer of stents and related products to treat aneurysms that saw it shares recover from a product recall earlier in the year.”
9. Stryker Corporation (NYSE:SYK)
Number of Hedge Fund Holders: 41
Stryker Corporation (NYSE:SYK) is an American company that develops several kinds of implants and surgical equipment. The implants target areas of the body such as the knee and the spine, while the surgical equipment offers surgeons a host of features. SYK ranks 9th in our list of best medical device stocks to buy now.
A strong point for Stryker Corporation (NYSE:SYK) is its dividend. The company currently pays out a $0.69 dividend per share per quarter for a 1.20% yield. Additionally, the company's neurotechnology and spine segment's growth of 12.64% is outpacing the sector CAGR of 7.9% and is expected to further benefit from the aging U.S. population - which is the company's largest market as well.
Edward Jones raised the company's share price rating to Buy in July 2022 as it stated that the firm is one of the fastest growing in its segment. Insider Monkey scanned 912 hedge fund portfolios for the first quarter of this year to discover that 41 had bought the company's shares.
Stryker Corporation (NYSE:SYK)'s largest shareholder is Terry Smith's Fundsmith LLP which owns 5.8 million shares that are worth $1.5 billion.
8. Edwards Lifesciences Corporation (NYSE:EW)
Number of Hedge Fund Holders: 45
Edwards Lifesciences Corporation (NYSE:EW) is a medical devices company that manufactures products that cover the heart, critical care, and surgical monitoring. The firm is headquartered in Irvine, California, United States.
Edwards Lifesciences Corporation (NYSE:EW) is operating in a strongly growing market, whose total addressable market (TAM) is estimated to double from a current $10 billion to $20 billion in 2028. Out of these, the company's primary earner, a heart replacement valve, which accounts for 65% of its revenue, is estimated to sit at $10 billion in 2028 from a current $5 billion. Indicating Edwards Lifesciences Corporation (NYSE:EW)'s strength, the firm captured $3.7 billion from this market as of its latest earnings.
Edwards Lifesciences Corporation (NYSE:EW)'s share price target was raised to $118 from $115 by Citi in July 2022, as it shared the belief that the stock can appreciate later this year. 45 of 912 hedge funds polled by Insider Monkey for this year's March quarter had bought the company's shares.
Edwards Lifesciences Corporation (NYSE:EW)'s largest investor is Ken Fisher's Fisher Asset Management which owns 7 million shares that are worth $836 million.
“Innovation can foster growth in Health Care fields other than drug discovery. Edwards Lifesciences makes minimally invasive devices to treat heart disease or for critical care monitoring. Its transcatheter heart valve, SAPIEN, is the most-implanted aortic heart valve in the world. Having settled a lawsuit with Abbott over alleged patent infringement, Edwards is now moving ahead with a newer product line called PASCAL to treat elderly or frail patients—for whom currently available treatments are ineffective—for mitral and tricuspid disease. PASCAL is the fruit of the company’s ongoing investment in research and development. Between PASCAL and its next-generation SAPIEN valve, the company expects to double its addressable market to approximately US$20 billion by 2028.”
7. Align Technology, Inc. (NASDAQ:ALGN)
Number of Hedge Fund Holders: 45
Align Technology, Inc. (NASDAQ:ALGN) is a clear aligner and intraoral scanner manufacturer that serves the needs of orthodontists and dentists. It is headquartered in Tempe, Arizona, United States.
Align Technology, Inc. (NASDAQ:ALGN) estimates that out of the 21 million orthodontist cases globally in 2021, 19 million ended up using its products. The company also has more than 2,000 active and pending patents globally, lending it a key advantage in an industry with an estimated CAGR of 19.7%. Additionally, by the end of last year, Align Technology, Inc. (NASDAQ:ALGN) had trained more than 122,000 dentists with its tools, for a strong customer market.
Insider Monkey's 912 hedge fund survey for the first quarter of this year revealed that 45 had invested in the company.
Align Technology, Inc. (NASDAQ:ALGN)'s largest investor is Ken Fisher's Fisher Asset Management which owns 571,043 shares that are worth $248 million.
Artko Capital mentioned the company in its Q1 2022 investor letter. Here is what the fund said:
“Align Technology (NASDAQ:ALGN), the leading global provider of clear aligners (“invisible braces”) and dental scanning equipment, warned that rising Omicron cases would suppress first-quarter growth, leading the market to question its guidance for annual topline growth of 20-30%, even though we think its growth will be plenty durable. Align remains among the fastest growing and most innovative companies in consumer health.”
6. Becton, Dickinson and Company (NYSE:BDX)
Number of Hedge Fund Holders: 49
Becton, Dickinson and Company (NYSE:BDX) is a diversified medical devices company that sells its products to several sectors. These include healthcare providers, laboratories, pharmaceutical companies, and the general public. The firm is headquartered in Franklin Lakes, New Jersey, United States.
A key fact about Becton, Dickinson and Company (NYSE:BDX), and one which is important for any healthcare firm, is the company's product portfolio. The firm has more than 100 products planned for launch by 2025, which suggests that Becton, Dickinson and Company (NYSE:BDX) will deeply penetrate a host of different markets. To improve matters, its latest financial results released in August 2022 saw the company raise its revenue guidance by $250 million, and it also pays an 87 cent divided.
Insider Monkey's Q1 2022 survey of 912 hedge funds outlined that 49 had invested in the company.
Becton, Dickinson and Company (NYSE:BDX)'s largest investor is David Blood and Al Gore's Generation Investment Management which owns 4.4 million shares that are worth $1.1 billion.
Johnson & Johnson (NYSE:JNJ), Abbott Laboratories (NYSE:ABT), and Medtronic plc (NYSE:MDT) are met by Becton, Dickinson and Company (NYSE:BDX) in our list of hot medical devices stocks.
Click to continue reading and see 5 Best Medical Device Stocks To Buy Now.
Disclosure. None. 12 Best Medical Device Stocks To Buy Now is originally published on Insider Monkey.