Fundamentally, few sectors exist outside of the broad healthcare umbrella that offer what I would term permanent relevance. In this case, the concept of caring for other people is likely an eternal one. So, it makes sense to consider medical technology or MedTech stocks to buy.
As you know, the innovation ecosystem constantly moves in one direction: forward. It seems like every day, someone is talking about artificial intelligence or automated robotics or some invention in the connectivity arena. Enterprises are constantly pushing the boundaries of what is possible through technology. That’s fertile ground for the medical sector.
Subsequently, MedTech stocks to buy benefit handsomely from a large total addressable market. According to Future Market Insights, the underlying space reached a valuation of about $503.2 billion last year. By 2033, the ecosystem could be worth approximately $776.47 billion, implying a compound annual growth rate (CAGR) of 4.4%.
While that’s not the greatest growth rate, the sector is also starting from a massive position. Therefore, the future for MedTech stocks to buy appears to be a bright one.
Abbott Laboratories (ABT)
One of the most trusted names among MedTech stocks to buy, Abbott Laboratories (NYSE:ABT) along with its subsidiaries discovers, develops, manufactures and sells healthcare products worldwide. It also provides generic pharmaceuticals for the treatment of multiple diseases and conditions, such as pancreatic exocrine insufficiency and irritable bowel syndrome. This flexibility should help Abbott rise above the ebb and flow of the market.
Financially, Abbott doesn’t exactly offer a stellar performance. However, it’s a consistent player. Between the second quarter of 2023 to Q1 2024, the company’s average earnings per share reached about $1.10. This print translated to an average earnings surprise – the magnitude by which a company exceeded analysts’ bottom-line projections – of 2.43%.
During the trailing 12 months (TTM), ABT posted net income of $5.61 billion or earnings of $3.21 per share. Sales during the period reached $40.33 billion. For fiscal 2024, analysts anticipate EPS to rise 4.3% to land at $4.63. On the top line, sales may see a 4.1% rise to $41.75 billion. Lastly, the company offers a forward yield of 2.1%.
InMode (INMD)
Based in Israel, InMode (NASDAQ:INMD) is one of the smaller but promising ideas among MedTech stocks to buy. Presently, it carries a market capitalization of $1.59 billion after dropping about 19% since the start of the year. InMode designs, develops, manufactures and markets minimally invasive aesthetic medical products. The technology is based on its proprietary radio frequency platform.
Financially, the company is hit or miss. In the past four quarters, InMode generated an average EPS of 59 cents. On average, that’s exactly what analysts expected; the numbers just arrived in a disjointed manner. Therefore, the average earnings surprise during the aforementioned period landed at 2.05% below parity.
In the TTM period, InMode generated net income of $181.11 million or earnings of $2.11 per share. Revenue in the cycle reached $466.26 million. Admittedly, covering experts see a rough outing for the company in fiscal 2024, with both earnings and sales projected to decline. However, fiscal 2025 could see the start of a recovery, with EPS moving to $2.27 on revenue of $517.07 million.
Outset Medical (OM)
Headquartered in San Jose, California, Outset Medical (NASDAQ:OM) engages in the development of a dialysis system called Tablo. It’s a compact console with integrated water purification and on-demand dialysate production. It also provides software and connectivity capabilities for dialysis care in acute and home settings. Thanks to providing a much more convenient solution, Outset could be an intriguing idea for MedTech stocks to buy.
Still, promising enterprises sometimes lack in the immediate financial substance and that’s the case here. Over the past four quarters, Outset posted a loss per share of 64 cents. Further, the quarterly surprise came out to only 0.73%, which really isn’t that impressive. During the TTM period, Outset incurred a net loss of $167.77 million or $3.36 per share. Revenue hit $125.08 million.
Looking out to the end of the year, however, analysts see Outset’s loss per share reaching $1.79. That’s an improvement over last year’s loss of $2.70 per share. Further, the top line could expand by 12.3% to hit $146.41 million. In the following year, revenue could rise even more (by 18.6%) to hit $173.64 million.
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.
