Overall, the MedTech ecosystem reached a valuation of $503.2 billion last year, per Future Market Insights. By 2033, the sector could be worth nearly $776.5 billion. If so, the expansion would imply a compound annual growth rate (CAGR) of 4.4%. Fundamentally, chronic conditions such as diabetes, cardiovascular disease and obesity are on the rise globally. Therefore, MedTech stocks will likely benefit from burgeoning relevance.
While it may be tempting to view the medical innovation space cynically, we should also note that chronic disease imposes a collective economic impact. Therefore, these MedTech stocks offer a win-win for everyone.
Johnson & Johnson (JNJ)
A global healthcare juggernaut, Johnson & Johnson (NYSE:JNJ) focuses on two primary segments after spinning off its consumer health productions division: pharmaceuticals and medical devices. The latter segment covers areas such as orthopedics, surgery, interventional solutions and vision care. As a top-tier name in MedTech stocks, J&J benefits from its brand footprint and generally predictable revenue streams.
Financially, the company probably wouldn’t be classified as remarkable. However, what investors should appreciate is that it gets the job done. In the past year since the second quarter, J&J posted an average earnings per share of $2.62. That’s above the collective consensus estimate over the period of $2.54, yielding an earnings surprise of 3.28%.
To be fair, JNJ stock isn’t cheap, trading hands at 4.5X trailing-year sales. However, it’s a modest premium over the past year’s average metric of 4.39X. Further, analysts see slow and steady expansion of the business over the next two years. By the end of fiscal 2025, EPS could be $10.71 on revenue of $91.11 billion. Last year, these metrics sat at $9.92 on $85.16 billion.
Abbott Laboratories (ABT)
A diversified healthcare enterprise, Abbott Laboratories (NYSE:ABT) features solutions in diagnostics, nutrition, pharmaceuticals and medical devices. It’s one of the most popular names among MedTech stocks thanks to its vast product portfolio, particularly for cardiovascular and diabetes care. Notably, its FreeStyle Libre brand of continuous glucose monitoring systems make Abbott a key player in managing chronic conditions.
As with Johnson & Johnson above, Abbott doesn’t particularly generate impressive financials. However, it’s a reliable entity. In the past year since Q2, the company posted an average EPS of $1.11. This figure pipped the consensus view by two pennies, yielding an earnings surprise of 2.6%.
ABT stock isn’t super pricey in terms of valuation but it’s not cheap. Right now, shares trade at 4.5X sales. However, the market previously accepted a revenue multiple of 4.54X. In that sense, Abbott appears fairly valued.
Looking out to year’s end, analysts see EPS rising by 5% to $4.66. On the top line, sales could see a 4.1% lift to $41.74 billion. Add in a 2.1% forward yield and you have the makings of one of the top MedTech stocks.
Edwards Lifesciences (EW)
Billed as a specialist in the field for addressing structural heart diseases, Edwards Lifesciences (NYSE:EW) focuses on developing heart valve replacement technologies and critical care monitoring systems. The company stands at the forefront of cardiovascular innovation. In particular, its minimally invasive heart valve replacement solution offers a literal lifeline for patients.
Financially, it must be stated that Edwards isn’t as impressive as other major MedTech stocks. In Q3 and Q4 of last year, the company only met earnings expectations. However, it did beat bottom-line targets in the subsequent two quarters. Overall, the average EPS came out to 65 cents, beating the consensus average of 64 cents.
Another factor to consider is the higher premium. Presently, EW stock trades at 6.72X trailing-year sales. While elevated among peers, the market previously accepted a multiple of 9.09X in the past year.
Notably, analysts are looking at EPS expansion of almost 8% to $2.70 by year’s end. Also, the top line could rise to $6.39 billion, up 6.4%.
Glaukos (GKOS)
An ophthalmic pharmaceutical enterprise, Glaukos (NYSE:GKOS) develops devices and therapeutics for the treatment of glaucoma, corneal disorders and retinal diseases. To note, Glaukos is one of the pioneers in the field of micro-invasive glaucoma surgery or MIGS. Its innovative approach combined with certain less-invasive treatment options make GKOS an attractive idea for MedTech stocks.
Glaukos represents one of the riskier ideas in the sector. For one thing, it’s not profitable. Moreover, in the past year since Q1 2024, the company incurred a loss per share of 60 cents. That’s worse than the anticipated 56 cents in the red, yielding a negative “earnings” surprise of 7%.
Also, the price-to-sales ratio of nearly 18X may be tough to swallow. It’s also up from the prior year’s average metric of 11.9X. So, why bother with GKOS stock?
Analysts are looking for robust growth in the years ahead. By the end of fiscal 2025, sales could hit $451.62 million. That’s up significantly from last year’s print of $314.71 million. For speculators, Glaukos could rank among the MedTech stocks to gamble on.
Inari Medical (NARI)
Based in Irvine, California, Inari Medical (NASDAQ:NARI) develops minimally invasive catheter-based devices to treat venous diseases. These include blood clots and deep vein thrombosis. One of the company’s mainline products is called LimFlow, which is designed for patients who have chronic limb-threatening ischemia with no suitable endovascular or surgical options.
Another higher-risk, higher-reward idea among MedTech stocks, Inari lacks consistent profitability. It posted great results in Q2 and Q3 of last year. However, the subsequent two quarters have been messy. Overall, the average loss per share in the past four quarters came out to 5 cents. However, experts were anticipating a loss of 8 cents per share.
On the top line, Inari is a bit pricey for a MedTech player, trading hands at 5.89X sales. That said, in the past year this metric stood at 7.54X. It’s conceivable that NARI stock might rise to its prior valuation.
By the end of 2024, analysts are looking for revenue of $598.72 million. If so, that would imply a growth rate of 21.3%, making NARI an intriguing idea for MedTech stocks to buy.
iRhythm Technologies (IRTC)
A digital healthcare company, iRhythm Technologies (NASDAQ:IRTC) engages in the design, development and commercialization of device-based tech. These solutions provide ambulatory cardiac monitoring services to diagnose arrhythmias. The company is known for its Zio Monitor patch, which offers a more convenient and comprehensive mechanism to detect arrhythmias.
Moving into an even riskier space for the possibility of greater rewards, iRhythm isn’t a profitable company. Indeed, during the past four quarters, the MedTech specialist incurred a loss per share of $1. That was conspicuously worse than the expected red ink of 74 cents, yielding a negative surprise of 35%.
To be sure, IRTC stock isn’t a screaming deal either in the revenue front, trading at 5.3X sales. However, in the past year, this metric stood at 7.34X. Again, it’s possible that with some positive catalyst, IRTC may rise to its former valuation.
Analysts are hoping for exactly that, with fiscal 2024 sales possibly landing at $583.5 million. That would be up 18.4% from the prior year’s tally of $492.68 million. It’s one of the MedTech stocks to consider if you’re the gambling type.
SI-Bone (SIBN)
A medical device firm that operates in the field of musculoskeletal disorders, SI-Bone (NASDAQ:SIBN) is relevant but also highly speculative. As one of the smaller MedTech stocks available, SIBN’s price action is subject to extreme volatility. That said, the fundamentals are compelling. SI-Bone offers minimally invasive surgical implants for the treatment of sacroiliac joint dysfunction.
As you might imagine, SI-Bone has difficulty with the profitability department. In the past four quarters, the company posted an average loss per share of 27 cents. Still, analysts anticipated during this time that the average loss would land at 33 cents. So, technically speaking, the average surprise came out to 18%.
Regarding sales, SIBN trades at 4.19X revenue. That’s not terrible but it’s not great by any means. However, in the past year, the metric stood at loftier 6.15X. Under the right conditions, SI-Bone could rise to its former valuation.
Analysts are aiming for such a reality to materialize, broadcasting a sales target of $165.05 million by year’s end. That’s up 18.8% from the prior year. In the following year, revenue could pop again to $191.54 million, potentially enticing market gamblers.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a LONG position in JNJ.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.