12 Best Medical Technology Stocks To Buy Now
In this article, we discuss 12 of the best medical device stocks to buy now. If you want to skip our detailed healthcare and medical technology industry discussion, head directly to the 5 Best Medical Technology Stocks To Buy Now.
The medical technology (MedTech) sector plays a significant role in healthcare, focusing primarily on developing medical devices designed to streamline disease prevention, diagnosis, and treatment. Notable products in this industry include widely recognized devices such as pacemakers, imaging instruments, dialysis machines, and various implants.
The medical technology industry has been instrumental in saving millions of lives and enhancing the quality of life for countless individuals globally. These companies have a rich history of prioritizing patient-centered innovation, with a significant investment of over $42 billion in research and development in 2022 alone. However, following a decade of robust returns for shareholders, MedTech companies experienced significant challenges during the COVID-19 pandemic. Factors such as decreased procedure volumes, disruptions in the supply chain, the "great resignation," and volatile capital markets collectively weakened what was fundamentally a solid industry. In 2022, the total revenue for the MedTech industry reached $573 billion. However, growth decelerated from the post-pandemic high of 16% in 2021 to a modest 3.5% in 2022, marking the lowest level since 2015. This slowdown persisted into the first half of 2023, with revenues for commercial leaders (public pure-play MedTechs with at least $500 million in annual revenue) essentially remaining flat, showing only a 0.4% growth compared to the previous year. According to Ernst & Young, the continuation of this trend from 2022 implies that the industry's robust performance in 2021 may have been an anomaly—a one-time post-COVID-19 correction—rather than a return to the trajectory observed from 2000 to 2007 when medical technology averaged 15% annual revenue growth, as opposed to the 5% average seen from 2008 to 2020.
The limitations imposed on in-person interactions due to COVID-19 prompted the adoption of new practices and preferences, placing increased significance on factors beyond the product itself. According to a McKinsey survey involving healthcare professionals (HCPs) globally, the percentage of US-based HCPs favoring in-person interactions with medical device sales representatives declined from 76% before COVID to 58% by August 2021. Conversely, their preference for remote engagement witnessed a 30% increase, and digital channels saw a 20% rise during the same period. Recognizing the increasing significance of Customer Experience (CX), several prominent players in the medical technology (MedTech) sector are beginning to design innovative experiences for their customers. Companies that persist in relying on "traditional" engagement models for Healthcare Professionals (HCPs), procurement professionals, and patients might face the risk of lagging behind in this evolving landscape.
The global MedTech industry stands to experience substantial growth in the future. In that same vein, some of the best medical technology stocks in the industry include the likes of Abbott Laboratories (NYSE:ABT), Thermo Fisher Scientific Inc. (NYSE:TMO), and Johnson & Johnson (NYSE:JNJ), among others listed below.
A close up of a modern ophthalmic medical device in use by a team of medical professionals.
Our Methodology
To curate our selection of best medical technology stocks to buy now, we examined Insider Monkey’s Q3 2023 database to pinpoint the frontrunners in the MedTech sector based on hedge fund sentiment. The subsequent list, arranged by the number of hedge funds holding their shares, comprises companies that provide products and services both domestically in the United States and internationally.
12. Illumina, Inc. (NASDAQ:ILMN)
Number of Hedge Fund Holders: 40
Illumina, Inc. (NASDAQ:ILMN) is a firm that focuses on the creation, production, and distribution of tools and systems designed for comprehensive examination of genetic variations and biological functions. Its operations are divided into two primary segments: Core Illumina and GRAIL. The company supplies a range of instruments and materials utilized in genetic sequencing and analysis, and it also offers a multi-cancer early detection test named Galleri.
On November 8, Illumina, Inc. (NASDAQ:ILMN) and Veracyte Inc. entered into a multi-year agreement to collaborate on the development of molecular tests as decentralized in vitro diagnostic (IVD) tests. As part of this agreement, the companies will jointly work on creating and delivering these tests as decentralized IVD tests, utilizing Illumina's NextSeq 550Dx next-generation sequencing (NGS) instrument.
In Q3 2023, Illumina, Inc. (NASDAQ:ILMN)’s prominent shareholder was Paul Cantor, Joseph Weiss, and Will Worm’s Beech Hill Partners since it owns 8,105 shares worth $1.11 million.
RiverPark Large Growth Fund made the following comment about Illumina, Inc. (NASDAQ:ILMN) in its Q2 2023 investor letter:
“Illumina, Inc. (NASDAQ:ILMN): Illumina was our top detractor in the quarter despite reporting first quarter results that were generally in line with expectations and reaffirming full-year guidance. Uncertainty around activist investor Carl Icahn’s impact on the business, the change of CEO and the possible forced divestiture of liquid biopsy subsidiary Grail (early-stage cancer screening via blood samples) all weighed on Illumina’s stock price.
We continue to view the company’s core genomics industry as offering one of the larger total addressable markets that we cover, and ILMN is the clear innovation leader in sequencing and array-based solutions for genetic analysis. With less than 0.02% of humans having been sequenced and 99% of the variants discovered in the genome having not yet been deciphered, Illumina, at less than $5 billion of TTM revenue, is still in its infancy in what is potentially a greater than $50 billion genetics analysis tools market opportunity. We believe Carl Icahn’s involvement is neutral to slightly positive to the extent he can help the company be more disciplined on expenses. We are cautiously optimistic that EU regulators’ push to force Illumina to divest Grail will lead to either or both 1) much higher core earnings or 2) a big valuation for Grail in a sale. We added to our ILMN position during the quarter; it is a core holding.”
Much like Abbott Laboratories (NYSE:ABT), Thermo Fisher Scientific Inc. (NYSE:TMO), and Johnson & Johnson (NYSE:JNJ), Illumina, Inc. (NASDAQ:ILMN) ranks as one of the best medical technology stocks to invest in.
11. Veeva Systems Inc. (NYSE:VEEV)
Number of Hedge Fund Holders: 41
Veeva Systems Inc. (NYSE:VEEV) is a provider of healthcare software services, facilitating the management of customer engagement, drug development, and various business operations for organizations. In September, the company broadened its software offerings by introducing a new cloud platform designed to assist pharmaceutical manufacturers in overseeing their production and supply chains.
On August 31, 2023, Veeva Systems Inc. (NYSE:VEEV) surprised investors with its strong second-quarter earnings report. The company posted earnings of $1.21 per share, surpassing the analyst consensus estimate of $1.13. Furthermore, Veeva achieved quarterly sales of $590.20 million, exceeding the analyst consensus estimate of $587.11 million. This favorable outcome led to several analysts revising their price targets for Veeva Systems Inc. (NYSE:VEEV). Piper Sandler analyst Brent Bracelin, maintaining an Overweight rating, increased the price target on the stock from $232 to $235.
41 out of the 910 hedge funds part of Insider Monkey’s Q3 2023 database are Veeva Systems Inc. (NYSE:VEEV)’s shareholders. These held a collective stake worth $951 million.
10. Stryker Corporation (NYSE:SYK)
Number of Hedge Fund Holders: 47
Established in 1941 and headquartered in Michigan, Stryker Corporation (NYSE:SYK) is a company specializing in medical technology products and services. Its business operations are organized into distinct segments, namely Orthopaedics, MedSurg, and Neurotechnology and Spine.
On November 9, Josh Jennings of TD Cowen reiterated a Buy rating on Stryker Corporation (NYSE:SYK), maintaining a price target of $322.00. The rating was influenced by several key factors, including Stryker's long-term growth strategy and targets, which were discussed during its 2023 Analyst Day. The firm's steady organic revenue growth forecast and a more robust near-term trajectory for Operating Margin (OM) expansion compared to previous years contribute to the positive outlook. The updated long-range plan is anticipated to reinforce investor confidence in Stryker Corporation (NYSE:SYK) as a consistently top-tier performer among large-cap Medtech companies, given the management's extensive experience.
At the end of September 2023, 47 hedge funds in Insider Monkey’s database owned investments in Stryker Corporation (NYSE:SYK), up from 46 in the previous quarter. The consolidated value of stakes owned by these hedge funds is over $3.13 billion.
9. Edwards Lifesciences Corporation (NYSE:EW)
Number of Hedge Fund Holders: 48
Edwards Lifesciences Corporation (NYSE:EW) is a medical technology company based in Irvine, California, with a focus on artificial heart valves and hemodynamic monitoring. The company is renowned for developing the SAPIEN transcatheter aortic heart valve, constructed with cow tissue and mounted on a balloon-expandable, cobalt-chromium frame, which is deployed through a catheter.
In the third quarter of 2023, Edwards Lifesciences Corporation (NYSE:EW) reported a 12% increase in sales, driven by robust demand for the company's artificial heart valves and other devices. Sales of Edwards' transcatheter aortic valve replacement (TAVR), a device used for minimally invasive surgery in individuals with heart valve disease, saw an 11% rise to $960.9 million. Despite facing heightened competition from rivals in the TAVR space, Edwards Lifesciences Corporation (NYSE:EW) maintained its full-year forecasts for profit, total revenue, and TAVR device sales. For the fourth quarter, the company anticipates total sales in the range of $1.45 billion to $1.53 billion, slightly below analysts' expectations of $1.54 billion.
According to Insider Monkey’s third quarter database, 48 hedge funds were bullish on Edwards Lifesciences Corporation (NYSE:EW), as opposed to 51 hedge funds in the past quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP held a significant stake in the company, with 1.78 million shares worth $123.7 million.
8. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 59
Medtronic plc (NYSE:MDT) is a global medical technology company that manufactures surgical instruments and equipment for a range of medical procedures. With an impressive 46-year track record of consistently increasing dividends, the company currently distributes a quarterly dividend of $0.69 per share. As of November 11, the stock boasts a dividend yield of 3.90%.
The number of hedge funds tracked by Insider Monkey owning stakes in Medtronic plc (NYSE:MDT) declined to 59 in Q3 2023, from 63 in the preceding quarter. The collective value of these stakes is more than $2.07 billion.
Appleseed Fund made the following comment about Medtronic plc (NYSE:MDT) in its Q1 2023 investor letter:
“During the most recent quarter, Appleseed Fund added three new equity holdings: Medtronic plc (NYSE:MDT), Stanley Black & Decker (SWK), and Synovus Financial (SNV). Medtronic is the world’s largest device manufacturer, and it holds the number one or number two market share in most of its product segments. Medtronic’s business is heavily weighted towards complicated in-patient procedures, which are typically quite profitable. Industry dynamics are quite attractive with an aging global population and the growth of improved healthcare in emerging markets; furthermore, most of its segments are highly concentrated with just 2-3 players that split each segment’s market share, affording the key participants with significant economies of scale and pricing power. The Company has been recently addressing several temporary headwinds including a strong dollar, inflation, a delayed recovery in surgical volumes from the coronavirus pandemic, and supply chain issues. Once these issues reach the rearview mirror, the Company’s growth and margin expansion plans should transform into reality.”
7. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 62
Abbott Laboratories (NYSE:ABT) is a multinational medical devices and healthcare company headquartered in Abbott Park, Illinois, United States. The company's diverse range of products includes Pedialyte, Similac, BinaxNOW, Ensure, Glucerna, ZonePerfect, FreeStyle Libre, i-STAT, and MitraClip.
In the third quarter, Abbott Laboratories (NYSE:ABT) experienced a 2.5% year-over-year (YoY) decline in revenues, amounting to $10.14 billion, yet surpassing estimates by $320 million. The company exceeded the anticipated earnings per share (EPS) of $1.10 by posting a non-GAAP EPS of $1.14. Abbott Laboratories (NYSE:ABT) anticipates its full-year adjusted diluted EPS to fall within the range of $4.42 to $4.46 and projects low double-digit growth in 2023 organic sales, excluding COVID-19 testing-related sales.
As of Q3 2023, 69 of the 910 hedge funds tracked by Insider Monkey owned shares of Abbott Laboratories (NYSE:ABT). Among the leading hedge fund shareholders was Ric Dillon’s Diamond Hill Capital with ownership of 5.06 million shares valued at $490.45 million.
6. Boston Scientific Corporation (NYSE:BSX)
Number of Hedge Fund Holders: 65
Boston Scientific Corporation (NYSE:BSX), incorporated in Delaware, operates as a biomedical/biotechnology engineering firm and a multinational manufacturer of medical devices utilized in various interventional medical specialties. These specialties encompass interventional radiology, interventional cardiology, peripheral interventions, and oncology, among others.
During the third quarter Q3 of 2023, Boston Scientific Corporation (NYSE:BSX) reported net sales of $3.52 billion, up from $3.17 billion in the corresponding period of the previous year. This growth is evident across multiple metrics, with an 11.2% increase on a reported basis, an 11.1% rise on an operational basis, and a 10.2% increase on an organic basis, all in comparison to the prior year. The company posted a GAAP net income attributable to its common stockholders, reaching $505 million or $0.34 earnings per share (EPS), representing an increase from $174 million or $0.12 per share in the previous year.
Insider Monkey’s third quarter of 2023 survey covering 910 hedge funds revealed that 65 had invested in Boston Scientific Corporation (NYSE:BSX). During the third quarter, Ken Griffin’s Citadel Investment Group was the biggest shareholder, owning 21 million shares that are worth $1.1 billion.
Boston Scientific Corporation (NYSE:BSX) joins the ranks of Abbott Laboratories (NYSE:ABT), Thermo Fisher Scientific Inc. (NYSE:TMO), and Johnson & Johnson (NYSE:JNJ) as one of the best medical technology stocks investors should keep on their radars.
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Disclosure. None. 12 Best Medical Technology Stocks To Buy Now is originally published on Insider Monkey.
