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Buy 5 Medical Devices Stocks to Enhance Your Portfolio in 2H
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The Medical Instruments industry is highly fragmented, with participants engaged in research and development (R&D) in therapeutic areas. The industry has been witnessing a gradual transition from remote healthcare and contactless services during the pandemic to its original space of point-of-care testing, heavy as well as minimally invasive implants, elective procedures, and so on and so forth.
The medical instruments space has been benefiting from the ongoing merger and acquisition trend. The smaller and mid-sized industry players have been trying to compete with the big shots through consolidation. This trend is more visible after the pandemic-led downturn. The big players are also attempting to enter new markets by acquiring niche products.
Moreover, since the beginning of 2023, this industry has been witnessing massive adoption of artificial intelligence (AI) and the Internet of Medical Things in the form of digital healthcare options in hospitals and other healthcare settings. Digital enhancement, while optimizing costs, proves to be better for clinical outcomes.
With an increase in the adoption of digital platforms within the medical device space, robotic surgeries, big-data analytics, bioprinting, 3D printing, electronic health records, predictive analytics, real-time alerting and revenue cycle management services are gaining prominence in the United States.
However, the Medical Instruments players are suffering from logistical challenges and higher unit costs. The pandemic-led devastation of the global supply-chain management system and the effects of monetary policy tightening by the Fed to combat a record-high inflation rate and the withdrawal of fiscal support amid high debt are negatively impacting the industry.
Our Top Picks
We have narrowed our search to five Medical Instruments stocks with strong potential for the rest of 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart b elow shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
DexCom Inc. (DXCM - Free Report) has benefited from an impressive contribution from the Sensor segment and domestic and international revenue growth were the key catalysts. DXCM’s prospects with Stelo as an OTC monitor for type 2 diabetes bode well.
DXCM made continued advancements concerning key strategic objectives and ended the quarter with new patient additions. DXCM’s slew of tie-ups with AID systems are encouraging. A solid international foothold and robust product portfolio augur well. A strong solvency position is an added plus.
DexCom has an expected revenue and earnings growth rate of 19.4% and 17.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the last 60 days.
Hologic Inc. (HOLX - Free Report) continues to witness revenue growth with a recovery in procedural volumes and an acceleration in new business lines. HOLX’s GYN Surgical business is registering growth driven by contributions from MyoSure Fluent Fluid Management and Laparoscopy.
HOLX’s expanded global installed base of Panthers instruments represents the catalyst for sustained growth in Diagnostics. HOLX’s international business continues to drive strong top-line growth. To streamline its operations and reduce the cost of revenues, Hologic has been adopting strategies that are likely to drive future growth.
Hologic has an expected revenue and earnings growth rate of 0.1% and 3%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 60 days.
Alcon Inc. (ALC - Free Report) is witnessing strength in the Surgical and Vision Care segments backed by healthy markets. Within Surgical, ALC continues to gain market share driven by strong consumables and equipment sales. ALC’s flagship lenses, Vivity and PanOptix and monofocal torics continue to lead the category globally.
In Vision Care, ALC is registering solid growth, banking on strong sales of its contact lenses and ocular health products. In contact lenses, ALC is successfully executing its strategy of investing in fast-growing market segments. ALC is witnessing a strong uptake of its specialty daily lenses, including DAILIES Total1 Toric, DAILIES Total1 Multifocal and Precision1 Toric.
Alcon has an expected revenue and earnings growth rate of 6.1% and 11.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days.
Intuitive Surgical Inc. (ISRG - Free Report) has benefited on the back of continued growth in the company’s da Vinci procedure volume, coupled with strong Ion procedure growth. ISRG’s initiative to increase the pricing of procedures should also continue to aid in sales growth in 2024.
Improving procedure volume along with better system placements and services across all markets will drive top-line growth of ISRG this year. The launch of da Vinci SP in Europe and da Vinci 5 in the U.S. market should drive ISRG’s system placements higher.
Intuitive Surgical has an expected revenue and earnings growth rate of 12.5% and 9.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the last 60 days.
Thermo Fisher Scientific Inc. (TMO - Free Report) is braving the ongoing tough economic conditions by utilizing the PPI (Practical Process Improvement) Business System, resulting in strong financial performance. TMO’s growth strategy is further bolstered by the introduction of the Axiom PangenomiX Array, a high-throughput array designed for global genomic studies.
TMO’s consistent efforts to expand bioproduction purification resin capacity, which is used in the mRNA manufacturing process, look encouraging. TMO continues to prioritize its partnership with customers to drive innovation and improve patient care, which bodes well. A strong solvency position is an added advantage.
Thermo Fisher Scientific has an expected revenue and earnings growth rate of 0.2% and 0.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days.
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Buy 5 Medical Devices Stocks to Enhance Your Portfolio in 2H
The Medical Instruments industry is highly fragmented, with participants engaged in research and development (R&D) in therapeutic areas. The industry has been witnessing a gradual transition from remote healthcare and contactless services during the pandemic to its original space of point-of-care testing, heavy as well as minimally invasive implants, elective procedures, and so on and so forth.
The medical instruments space has been benefiting from the ongoing merger and acquisition trend. The smaller and mid-sized industry players have been trying to compete with the big shots through consolidation. This trend is more visible after the pandemic-led downturn. The big players are also attempting to enter new markets by acquiring niche products.
Moreover, since the beginning of 2023, this industry has been witnessing massive adoption of artificial intelligence (AI) and the Internet of Medical Things in the form of digital healthcare options in hospitals and other healthcare settings. Digital enhancement, while optimizing costs, proves to be better for clinical outcomes.
With an increase in the adoption of digital platforms within the medical device space, robotic surgeries, big-data analytics, bioprinting, 3D printing, electronic health records, predictive analytics, real-time alerting and revenue cycle management services are gaining prominence in the United States.
However, the Medical Instruments players are suffering from logistical challenges and higher unit costs. The pandemic-led devastation of the global supply-chain management system and the effects of monetary policy tightening by the Fed to combat a record-high inflation rate and the withdrawal of fiscal support amid high debt are negatively impacting the industry.
Our Top Picks
We have narrowed our search to five Medical Instruments stocks with strong potential for the rest of 2024. These stocks have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart b elow shows the price performance of our five picks in the past month.
Image Source: Zacks Investment Research
DexCom Inc. (DXCM - Free Report) has benefited from an impressive contribution from the Sensor segment and domestic and international revenue growth were the key catalysts. DXCM’s prospects with Stelo as an OTC monitor for type 2 diabetes bode well.
DXCM made continued advancements concerning key strategic objectives and ended the quarter with new patient additions. DXCM’s slew of tie-ups with AID systems are encouraging. A solid international foothold and robust product portfolio augur well. A strong solvency position is an added plus.
DexCom has an expected revenue and earnings growth rate of 19.4% and 17.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the last 60 days.
Hologic Inc. (HOLX - Free Report) continues to witness revenue growth with a recovery in procedural volumes and an acceleration in new business lines. HOLX’s GYN Surgical business is registering growth driven by contributions from MyoSure Fluent Fluid Management and Laparoscopy.
HOLX’s expanded global installed base of Panthers instruments represents the catalyst for sustained growth in Diagnostics. HOLX’s international business continues to drive strong top-line growth. To streamline its operations and reduce the cost of revenues, Hologic has been adopting strategies that are likely to drive future growth.
Hologic has an expected revenue and earnings growth rate of 0.1% and 3%, respectively, for the current year (ending September 2024). The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 60 days.
Alcon Inc. (ALC - Free Report) is witnessing strength in the Surgical and Vision Care segments backed by healthy markets. Within Surgical, ALC continues to gain market share driven by strong consumables and equipment sales. ALC’s flagship lenses, Vivity and PanOptix and monofocal torics continue to lead the category globally.
In Vision Care, ALC is registering solid growth, banking on strong sales of its contact lenses and ocular health products. In contact lenses, ALC is successfully executing its strategy of investing in fast-growing market segments. ALC is witnessing a strong uptake of its specialty daily lenses, including DAILIES Total1 Toric, DAILIES Total1 Multifocal and Precision1 Toric.
Alcon has an expected revenue and earnings growth rate of 6.1% and 11.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.1% over the last 60 days.
Intuitive Surgical Inc. (ISRG - Free Report) has benefited on the back of continued growth in the company’s da Vinci procedure volume, coupled with strong Ion procedure growth. ISRG’s initiative to increase the pricing of procedures should also continue to aid in sales growth in 2024.
Improving procedure volume along with better system placements and services across all markets will drive top-line growth of ISRG this year. The launch of da Vinci SP in Europe and da Vinci 5 in the U.S. market should drive ISRG’s system placements higher.
Intuitive Surgical has an expected revenue and earnings growth rate of 12.5% and 9.6%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.5% over the last 60 days.
Thermo Fisher Scientific Inc. (TMO - Free Report) is braving the ongoing tough economic conditions by utilizing the PPI (Practical Process Improvement) Business System, resulting in strong financial performance. TMO’s growth strategy is further bolstered by the introduction of the Axiom PangenomiX Array, a high-throughput array designed for global genomic studies.
TMO’s consistent efforts to expand bioproduction purification resin capacity, which is used in the mRNA manufacturing process, look encouraging. TMO continues to prioritize its partnership with customers to drive innovation and improve patient care, which bodes well. A strong solvency position is an added advantage.
Thermo Fisher Scientific has an expected revenue and earnings growth rate of 0.2% and 0.5%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days.