As the global rise in diseases and patients drives the need for advanced healthcare solutions, the demand for medical devices, therapies, and high-quality treatments grows to improve outcomes, reduce costs, and enhance access to care. With MedTech constantly innovating to meet these challenges, the industry presents a vast market with promising investment opportunities.
Therefore, as innovation in healthcare soars, investors could consider keeping an eye on fundamentally strong MedTech stocks like Becton, Dickinson and Company (BDX), Abbott Laboratories (ABT), and Medtronic plc (MDT).
The MedTech market is rapidly evolving and driven by trends such as remote care and personalized treatment. This growth is spurring investments in digital therapeutics, bioprinting, biometric wearables, digital health technologies, and 3D printing. These innovations improve patient monitoring and facilitate swift diagnosis and medical support, resulting in high demand in the healthcare sector.
MedTech has transformed the cardiovascular, orthopedic, neurological, urological, and diabetes sectors. Looking ahead, it will play a crucial role in enabling doctors to monitor patients’ health and deliver improved care, reducing the reliance on hospital admissions and surgeries. Consequently, the global medical devices market is expected to reach $886.80 billion by 2032, with a robust CAGR of 6.3%.
Furthermore, the healthcare sector is generating vast amounts of data that can enhance patient care. AI adoption is streamlining data management, optimizing electronic health records, and playing a crucial role in early disease detection and medical imaging. As a result, the global AI in medical devices market is projected to reach $97.07 billion by 2028, growing at a remarkable CAGR of 44.4%.
Considering these conducive trends, let’s analyze the fundamentals of the three Medical - Devices & Equipment picks mentioned above, beginning with the third choice.
Stock #3: Becton, Dickinson and Company (BDX)
BDX develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products for healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry, and the general public worldwide. The company operates in three segments: BD Medical, BD Life Sciences, and BD Interventional.
On September 18, 2024, BDX announced the commercial release of the BDX Neopak XtraFlow Glass Prefillable Syringe and expanded production capacity for its BDX Neopak Glass Prefillable Syringe platform. These advancements aim to enhance the injection experience for biologic therapies and meet growing market demand.
On September 3, 2024, BDX announced the completion of its acquisition of Edwards Lifesciences' Critical Care product group, now renamed BDX Advanced Patient Monitoring. This acquisition enhances BDX's smart connected care solutions with advanced AI-enabled monitoring technologies.
In terms of the trailing-12-month EBITDA margin, BDX’s 25.77% is 304.7% higher than the 6.37% industry average. Likewise, its 3.65% trailing-12-month Capex / Sales is 10.4% higher than the 3.30% industry average. Its 14.23% trailing-12-month EBIT margin is 403.4% higher than the 2.83% industry average.
During the third quarter ended June 30, 2024, BDX’s adjusted revenues increased 3.7% year-over-year to $5.06 billion. Similarly, its operating income grew 9.7% from the prior year to $602 million. The company’s net income was $487 million, reflecting a 19.7% year-over-year growth, and its adjusted EPS rose 18.2% to $3.50.
Street expects BDX’s EPS and revenue for the quarter ended September 30, 2024, to increase 10.2% and 5.2% year-over-year to $3.77 and $5.35 billion, respectively. It surpassed Street EPS estimates in three of the trailing four quarters. Over the past three months, the stock has gained 3.2% to close the last trading session at $241.10.
BDX’s POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #26 out of 134 stocks in the Medical - Devices & Equipment industry. It has a B grade for Growth, Stability, and Sentiment. Click here to see BDX’s ratings for Value, Momentum, and Quality.
Stock #2: Abbott Laboratories (ABT)
ABT and its subsidiaries discover, develop, manufacture, and sell healthcare products worldwide. They operate in four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.
On August 27, 2024, ABT expanded its Pure Bliss by Similac line to include European-made and USDA-certified organic infant formulas, offering the first organic liquid formula available at U.S. retail stores. These products provide gentle, complete nutrition with ingredients like A2 milk and milk sourced from Irish farms.
On August 7, 2024, ABT announced a global partnership with MDT to combine its FreeStyle Libre glucose monitoring system with MDT’s insulin delivery devices, improving diabetes management.
In terms of the trailing-12-month Capex / Sales, ABT’s 5.52% is 66.9% higher than the 3.30% industry average. Its 13.23% trailing-12-month levered FCF margin is 759.5% higher than the 1.54% industry average. Also, its 17.98% trailing-12-month EBIT margin is 536.1% higher than the 2.83% industry average.
For the first half that ended on June 30, 2024, ABT’s net sales rose 3.1% year-over-year to $20.34 billion. Its operating earnings grew marginally from the year-ago value to $3.06 billion. In addition, the company’s adjusted net earnings stood at $3.73 billion, or $2.12 per share, representing a marginal increase year-over-year.
Analysts expect ABT’s EPS and revenue for the quarter ended September 30, 2024, to increase 5.3% and 3.9% year-over-year to $1.20 and $10.53 billion, respectively. It surpassed Street EPS and revenue estimates in each of the trailing four quarters. Over the past year, the stock has gained 17.7% to close the last trading session at $114.01.
ABT’s robust fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.
It has a B grade for Stability. Within the same industry, it is ranked #24. To see ABT’s Growth, Value, Momentum, Sentiment, and Quality ratings, click here.
Stock #1: Medtronic plc (MDT)
Headquartered in Dublin, Ireland, Medtronic plc develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. It operates through four segments: Cardiovascular Portfolio, Neuroscience Portfolio, Medical Surgical Portfolio, and The Diabetes Operating Unit segment.
On September 25, 2024, MDT launched new technologies for its AiBLE spine surgery ecosystem, including innovations in imaging, robotics, and software, and announced a partnership with Siemens Healthineers to enhance spine surgery outcomes.
In terms of the trailing-12-month levered FCF margin, MDT’s 15.06% is 878.2% higher than the 1.54% industry average. Its 27.67% trailing-12-month EBITDA margin is 334.6% higher than the 6.37% industry average. Similarly, the stock’s 19.57% trailing-12-month EBIT margin is 592.2% higher than the 2.83% industry average.
MDT’s net sales for its first quarter ended July 26, 2024, increased 2.8% from the prior-year period to $7.92 billion. The company’s non-GAAP operating profit grew 2.3% over the prior-year quarter to $1.95 billion. In addition, its attributable net income rose 31.7% from the year-ago value to $1.04 billion, and its non-GAAP EPS stood at $1.23, up 2.5% year-over-year.
For the quarter ending October 31, 2024, MDT’s revenue is expected to increase 3.6% year-over-year to $8.27 billion. Its EPS for the quarter ending January 31, 2025, is expected to grow 5.6% year-over-year to $1.37. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 14.9% to close the last trading session at $90.03.
MDT’s positive outlook is reflected in its POWR Ratings. It has an overall rating of B, equating to a Buy in our proprietary rating system.
MDT has a B grade for Value and Stability. It is ranked #18 in the Medical - Devices & Equipment industry. Click here to access additional ratings of MDT for Growth, Momentum, Sentiment, and Quality.
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ABT shares were trading at $113.37 per share on Tuesday afternoon, down $0.64 (-0.56%). Year-to-date, ABT has gained 4.56%, versus a 20.57% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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