While the biotechnology sector may receive most of the attention under the broad healthcare umbrella, investors ought to spare some love for medical technology stocks. The enterprises undergirding these securities offer tremendously positive potential for overall patient outcomes.
Fundamentally, the sector enjoys decent growth projections despite being a relatively mature industry. According to BCC Research, the global medical device technology ecosystem reached a valuation of $639.1 billion in 2021. Experts project that by 2027, the space could be worth $953.4 billion. If so, that would represent a compound annual growth rate (CAGR) of 7.1%.
Therefore, even if the below ideas have already enjoyed prior success, there could still be more growth to be secured. With that in mind, below are compelling medical technology stocks to consider.
Johnson & Johnson (JNJ)
Based in New Brunswick, New Jersey, Johnson & Johnson (NYSE:JNJ) technically falls under the drug manufacturing category. However, J&J is also a powerhouse in the medtech segment. Per its public profile, the company provides myriad solutions, including electrophysiology products to treat heart rhythm disorders. It also offers neurovascular care that treats hemorrhagic and ischemic stroke.
Analysts rate JNJ stock a consensus moderate buy with a $175.21 average price target. The most optimistic forecast calls for $215 per share. While the company hasn’t had the cleanest earnings record, it’s usually consistent. Between the second quarter of last year to Q1 2024, J&J posted a positive earnings surprise of 1.6%. That’s inclusive of a miss in Q2.
In the trailing 12 months (TTM), the healthcare giant posted net income of $17.07 billion on revenue of $85.68 billion. For fiscal 2024, covering experts anticipate growth in earnings per share of 7.36% to reach $10.65. In addition, the top line could expand by nearly 4% to land at $88.35 billion, with a high-side target of $89.29 billion.
Combined with a forward dividend yield of 3.37%, JNJ is one of the medical technology stocks to buy.
Intuitive Surgical (ISRG)
Headquartered in Sunnyvale, California, Intuitive Surgical (NASDAQ:ISRG) operates in the medical instruments and supplies sector. Per its corporate profile, Intuitive develops, manufactures and markets products that enable physicians and healthcare providers to enhance the quality of and access to minimally invasive care. It’s best known for its da Vinci Surgical System, which focuses on the minimally invasive approach.
Analysts peg ISRG stock as a consensus strong buy with an average price target of $427.93. That doesn’t imply much upside. However, the most optimistic target calls for $475 per share. Wall Street’s experts justify this endorsement in part because of Intuitive’s consistency. In the past four quarters since Q1 2024, the company posted an average positive earnings surprise of 6.2%.
In the TTM period, net income reached $1.99 billion on sales of $7.32 billion. For fiscal 2024, analysts are hoping for 10% expansion in the bottom line to reach EPS of $6.28. On the top line, they’re targeting $8.02 billion, which would imply 12.5% growth. Looking out to fiscal 2025, sales could grow by 15.8% to $9.28 billion. Thus, ISRG is one of the hottest medical technology stocks to consider.
Stryker (SYK)
Hailing from Portage, Michigan, Stryker (NYSE:SYK) primarily focuses on its orthopedics and spinal business unit. This segment provides implants for use in total joint replacements. In addition, the company features a surgical and neurotechnology unit that offers surgical equipment and surgical navigation systems. As well, it provides endoscopic and communications systems.
Analysts rate SYK stock a consensus strong buy with a $382.06 average price target, implying about 14% upside potential. Moreover, the high-side target rises to $406 per share. They likely felt comfortable with this endorsement due to Stryker’s consistency. In the past four quarters since Q1 2024, the company’s average positive earnings surprise landed at 5.03%.
During the TTM period, net income reached $3.36 billion on revenue of $20.96 billion. For fiscal 2024, analysts are projecting 12.8% growth in the bottom line to hit EPS of $11.96. On the top line, sales could fly up to $22.31 billion, or 8.9% year-over-year growth. In fiscal 2025, sales could rise again to $24.04 billion, with a blue-sky target of $24.41 billion. Thus, it’s one of the medical technology stocks to consider.
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.
