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Bet on These 3 MedTech Growth Stocks for 2021 & Beyond

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The economic mayhem brought on by the coronavirus pandemic is barely showing any signs of easing. After a few months of some stability in the first half of 2021, the surge in the highly-transmissible Delta variant is haunting investors.

Going by a Reuters report, the U.S. economic rebound has been impeded in the third quarter, partly because of the spread of the Delta variant. However, the growth outlook still stands at 4.2% for 2022 and 2.3% for 2023.

Meanwhile, despite several temporary phases of market recovery over the past couple of months, the pessimism across major pandemic-battered industries in the United States is still looming large.

Brighter Picture for MedTech

On Sep 9, the new mandate announced by President Joe Biden unveiled a series of steps to combat the rising pandemic concerns, including the announcement of a forthcoming federal rule that all businesses with 100 or more employees have to ensure that every worker is either vaccinated for COVID-19 or will have to submit weekly coronavirus testing results.

Once the rule is implemented, several MedTech stocks, particularly companies in the field of testing and vaccines, are expected to report robust business gains. Also, this rule is expected to ease away the Delta-induced fear in the economy, which might again increase hospital and physician office visits, boosting demand for non-COVID elective procedures.

Furthermore, a report by World Bank noted that the U.S. economy has been bolstered by massive fiscal support and growth is expected to reach 6.8% in 2021, the fastest pace since 1984.

MedTech: A Comparatively Safe Bet

While theories about the impending new waves of coronavirus are still looming large, the MedTech space is expected to remain resilient on the transformation of business models according to changing demand pattern, inclination toward digital healthcare and a number of fiscal stimulus packages that the government has introduced of late.

Despite the pandemic-induced crisis, many MedTech companies have raised their 2021 outlook on rise in diagnostic testing demand.

In this line, Quest Diagnostics Incorporated DGX recently raised its full-year projection significantly. The company’s revenues for 2021 are now expected in the range of $9.84 billion to $10.09 billion versus the prior view of $9.54 billion to $9.79 billion.

Ideal Strategy for MedTech Investors

Amid the pandemic-induced market turmoil, when volatility peaks, it is always prudent to adopt a longer-term investing strategy and pick some growth-focused MedTech stocks which are fundamentally strong.

Once the pandemic fades, these stocks with a robust long-term growth potential along with strong and sustainable financial performance can be the best bets.

Here are a few MedTech companies with a Growth Score of A or B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

3 Stocks to Bet On

West Pharmaceutical Services, Inc. WST delivered robust performance in the second quarter of 2021 aided by solid organic sales growth in both of its base businesses and improving demand for products related to COVID-19 vaccines. It continues to witness strong uptake of HVP components, which include Westar, FluroTec, Envision and NovaPure offerings, and Daikyo’s Crystal Zenith. A raised financial outlook for 2021 instills further optimism in the stock. Net sales for full-year 2021 are projected between $2.76 billion and $2.79 billion (up from the prior range of $2.63-$2.65 billion), while adjusted earnings per share for 2021 are anticipated in the band of $8.05 to $8.20 (up from the previous range of $6.95-$7.10).

West Pharmaceutical Services, Inc. Price

West Pharmaceutical Services, Inc. Price
West Pharmaceutical Services, Inc. Price

West Pharmaceutical Services, Inc. price | West Pharmaceutical Services, Inc. Quote

This Zacks Rank #1 stock has a Growth Score of B. The stock’s return on equity (ROE) stands at an impressive 28.6% versus the industry’s 14.1%. In 2021, the company’s earnings are expected to grow 72.7%. It has an expected long-term earnings growth rate of 27.3%.

IDEXX Laboratories, Inc.’s IDXX top line in the second quarter was driven by strong sales at the CAG, LPD and Water businesses. The company witnessed sturdy gains in CAG Diagnostics’ recurring revenues, supported by sustained strong global trends in pet healthcare. IDEXX, boosted by the ongoing business recovery and strong performance in the last-reported quarter, has raised its financial outlook for 2021.

The company currently projects revenue growth for the year in the range of 17-18.5% on a reported and 14.5-16% on an organic basis. Further, IDEXX projects full-year earnings per share growth of 22-25% on a reported basis.

IDEXX Laboratories, Inc. Price

IDEXX Laboratories, Inc. Price
IDEXX Laboratories, Inc. Price

IDEXX Laboratories, Inc. price | IDEXX Laboratories, Inc. Quote

This Zacks Rank #2 stock has a Growth Score of B. The stock’s Price/Sales ratio stands at 18.5% versus the industry’s 6.3%. In 2021, the company’s earnings are expected to grow 24.4%. It has an expected long-term earnings growth rate of 19.9%.

Align Technology, Inc. ALGN exited the second quarter of 2021 with better-than-expected results despite the challenging business environment. Continued adoption of the company’s digital platform has also been a tailwind. The company is witnessing strong global growth in iTero business across all regions on the continued adoption of the iTero Element 5D Plus Series of next-generation scanners and imaging systems. Align Technology, on the back of its impressive performance, has raised its financial outlook for 2021. The company now expects revenue growth for the year in the range of 56-60% from 2020. Further, it expects revenue growth in the second half of 2021 to exceed the mid-point of its long-term operating model target of 20% to 30%.

Align Technology, Inc. Price

Align Technology, Inc. Price
Align Technology, Inc. Price

Align Technology, Inc. price | Align Technology, Inc. Quote

This Zacks Rank #2 stock has a Growth Score of A. The stock’s Price/Sales ratio stands at a very impressive 16.4% versus the industry’s 3.3%. In 2021, the company’s earnings are expected to grow 109.3%. It has an expected long-term earnings growth rate of 26.6%.


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Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report

Align Technology, Inc. (ALGN) : Free Stock Analysis Report

IDEXX Laboratories, Inc. (IDXX) : Free Stock Analysis Report

West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report

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