4 Top-Ranked MedTech Stocks to Bet on Heading Into 2021
Even though 2020 is drawing to an end, the nightmare seems far from over as the COVID-19 pandemic continues to severely affect people and economy. Resurgence in coronavirus cases and the long-drawn deliberation about the size of a new stimulus package have slowed down job market recovery. On top of this, several states and cities across the country have started to reinforce quarantine measures leaving market watchers quite jittery.
However, it is not as grim as it appears to be. According to a CNBC report, there is a possibility that the FDA could give authorization to Pfizer’s COVID-19 vaccine as early as end of this week. This, in turn, is likely to set the economy on a path to recovery and instill optimism among investors who have been plagued by market volatility over a significant part of the year.
It is worth mentioning that the coronavirus pandemic impacted most of the sectors throughout 2020 but MedTech proved to be more resilient to the same. Let’s see how investors can capitalize on this space backed by certain trends that can drive this sector’s performance in 2021.
MedTech Space Poised to Grow in 2021: Key Catalysts
The pandemic exhibited the importance of digital health, which contributed significantly to performance displayed by MedTech amid this crisis. Digital health will sustain this momentum and grow stronger in 2021. Telemedicine is likely to see more expansion in the coming year owing to a rise in usage of medical devices at home (for instance remote monitoring of cancer patients through the increase utilization of sensors), which is evident already. Similarly, artificial intelligence (AI), which helped immensely since the onset of the outbreak, will also maintain its successful run and thereby, companies involved in both telemedicine and AI will reap the benefits.
Although the role played digital health in this pandemic cannot be overstated, there is another offshoot of digital health — wearable devices — that will play a crucial role in 2021 as more and more people turn to self-monitoring tools. Moreover, the scope of innovation and focus on creating more advanced and improved wearable devices has evolved significantly amid this crisis, thereby instilling optimism in investors as the space has the potential to offer bankable returns.
Although there are specualtions regarding distribution of vaccines (post authorization) doing the rounds this month, diagnostic testing will still continue to hold its ground firmly next year. Despite the market volatility, the diagnostic testing business for COVID-19 is rapidly evolving based on the testing requirements throughout the world. Hence, companies like QIAGEN QGEN and Abbott Laboratories ABT are highly likely to continue their bullish run well into 2021.
Further, thanks to the pandemic, a change in business models can also be seen in 2021 as companies are leaning toward virtualized, remote-operated business models for medical care.
4 Impressive MedTech Stocks to Add to Your Portfolio
Based on the aforementioned factors, investors can safely put their bets on the MedTech space, which is well-poised for growth in 2021.
To narrow down the list, we have selected four stocks with a VGM Score of A or B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential.
Owens & Minor, Inc. OMI operates as a healthcare solutions company in the United States and internationally. The company has exhibited improved results courtesy of increased productivity, higher manufacturing output related to personal protective equipment (PPE), favorable revenue mix, and continued execution and delivery of operating efficiencies for the greater part of 2020. Additionally, strong third-quarter performance enabled the company to reconfirm double digit adjusted EPS growth in 2021. For 2021, the Zacks Consensus Estimate for revenues is pegged at $8.77 billion, suggesting an improvement of 6.2% from the previous year.
Shares of this Zacks Rank #1 company, with a VGM Score of A, have gained a whopping 388.4% on a year-to-date basis compared with the industry’s growth of 1.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher Scientific Inc. TMO is a scientific instrument maker and a world leader in serving science. The company has taken significant strides with respect to global pandemic response. Apart from a robust pipeline of COVID-19 testing, the company has been increasing its capacity to help governments and biopharma customers globally meet future demand for new therapies and vaccines. Rising demand for COVID-19 testing will favor the company in 2021. Also, solid growth at Life Sciences Solutions and Specialty Diagnostics segments is encouraging. For 2021, the Zacks Consensus Estimate for revenues stands at $32.99 billion, indicating growth of 7.1% from the previous year.
Shares of this Zacks Rank #2 company, with a VGM Score of B, have appreciated 46.5% on a year-to-date basis compared with the industry’s rally of 20.8%.
Quidel Corporation QDEL discovers, develops, manufactures and markets point-of-care, rapid diagnostic tests for detection of medical conditions and illnesses. The company has displayed substantial revenue growth on the back of higher demand of its COVID-19 products. Further, the company has been developing multi-analyte COVID-19 test panels to aid in the diagnosis of co-infections and rule-out flu and other illnesses, and ramp up overall test manufacturing scale. Apart from this, Quidel has been addressing the need for COVID-19 testing by securing its supply chain and scaling up its test manufacturing and distribution for both the molecular and rapid tests by over 100%. For fiscal 2021, the Zacks Consensus Estimate for revenues is pegged at $32.99 billion, suggesting an improvement of 7.1% from the previous year.
Shares of this Zacks Rank #1 company, with a VGM Score of B, have skyrocketed 160.1% on a year-to-date basis compared with the industry’s growth of 1.6%.
Hologic, Inc. HOLX develops, manufactures, and supplies diagnostics, medical imaging systems and surgical products which cater to the healthcare needs of women. The company exited fiscal fourth-quarter 2020 with better-than-expected results. Robust bottom and top-line growth amid the pandemic is encouraging. Also, the company has shown continued growth in the core molecular diagnostics sub-segment, which accounted for 87.2% of total Diagnostics revenues in the fiscal fourth quarter. The company will continue to ride on the momentum created by rise in demand for COVID-19 tests in 2021. For fiscal 2021, the Zacks Consensus Estimate for revenues is pegged at $32.99 billion, suggesting an improvement of 7.1% from the previous year.
Shares of this Zacks Rank #1 company, with a VGM Score of B, have gained 39.5% on a year-to-date basis compared with the industry’s rally of 20.8%.
More Stock News: This Is Bigger than the iPhone!
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Owens & Minor, Inc. (OMI) : Free Stock Analysis Report
Hologic, Inc. (HOLX) : Free Stock Analysis Report
QIAGEN N.V. (QGEN) : Free Stock Analysis Report
Abbott Laboratories (ABT) : Free Stock Analysis Report
Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report
Quidel Corporation (QDEL) : Free Stock Analysis Report
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