Healthcare IT is booming as health organizations increasingly invest in digital platforms like patient portals and virtual visits to enhance convenience, affordability, and the overall consumer experience. Strategies such as personalized care, extended service hours, and virtual health are improving accessibility and attracting a broader consumer base.

With innovation in healthcare on the rise, investors might consider fundamentally strong healthcare IT stocks like Medtronic plc (MDT), Abbott Laboratories (ABT), and Embecta Corp. (EMBC).

Digital transformation revolutionizes healthcare by improving efficiency, addressing workforce shortages, and alleviating margin pressures. Investments in connected devices and AI-driven tools empower consumers to take control of their health, enhancing patient-clinician interactions. Hence, the healthcare IT market is projected to reach $592.49 billion by 2025, growing at an impressive CAGR of 16.8%.

Moreover, the healthcare sector is increasingly focusing on multidimensional strategies, such as organic growth and consumer retention, rather than relying solely on mergers and acquisitions. Tailored IT solutions, including user-friendly, cost-effective devices that deliver accurate and reliable results, bridge gaps in healthcare and drive growth.

Likewise, this year, the medical devices market is expected to reach an impressive revenue of $539.10 billion. 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: 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 January 13, 2025, MDT announced that the Centers for Medicare & Medicaid Services (CMS) initiated a national coverage analysis for the Symplicity Spyral Renal Denervation System, a minimally invasive treatment for hypertension. This milestone reflects the growing public health need and robust data supporting the system’s effectiveness in reducing blood pressure.

On the same date, MDT announced CE Mark approval for BrainSense Adaptive deep brain stimulation (aDBS) and Electrode Identifier in Europe and the UK. This technology offers real-time, personalized therapy for Parkinson’s disease, marking a significant advancement in adaptive DBS systems.

In terms of the trailing-12-month levered FCF margin, MDT’s 15.19% is 530.7% higher than the 2.41% industry average. Its 27.77% trailing-12-month EBITDA margin is 385.1% higher than the 5.72% industry average. Similarly, the stock’s 19.77% trailing-12-month EBIT margin is 731.8% higher than the 2.38% industry average.

MDT’s net sales for the second quarter ended October 25, 2024, increased 5.2% from the prior-year period to $8.40 billion. The company’s non-GAAP operating profit grew 1.6% over the prior-year quarter to $2.04 billion. Additionally, its non-GAAP net income was $1.62 billion, or $1.26 per share, indicating a marginal increase from the prior-year quarter.

For the quarter ending January 31, 2025, MDT’s revenue is expected to increase 2.9% year-over-year to $8.33 billion. Its EPS for the same quarter is expected to grow 4.6% year-over-year to $1.36. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 12.4% to close the last trading session at $89.25.

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. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

MDT has a B grade for Value and Stability. It is ranked #27 out of 131 stocks in the Medical – Devices & Equipment industry. Click here to access additional ratings of MDT for Growth, Momentum, Sentiment, 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 December 17, 2024, ABT announced the world’s first in-human leadless left bundle branch area pacing (LBBAP) procedures using its investigational AVEIR CSP leadless pacemaker system. This innovation combines conduction systems and leadless pacing technologies, offering a new treatment option for patients with slow heart rhythms.

On November 25, 2024, ABT announced the first patient procedures with its investigational balloon-expandable TAVI system for severe aortic stenosis. This system aims to lay the groundwork for AI-guided procedures, enhancing precision and expanding treatment options alongside ABT’s Navitor TAVI system.

In terms of the trailing-12-month Capex / Sales, ABT’s 5.34% is 69.6% higher than the 3.15% industry average. Its 15.54% trailing-12-month levered FCF margin is 545.3% higher than the 2.41% industry average. Also, its 16.82% trailing-12-month EBIT margin is 607.6% higher than the 2.38% industry average.

For the twelve months ended December 31, 2024, ABT’s net sales rose 4.6% year-over-year to $41.95 billion. Its operating earnings increased 5.4% from the prior year to $6.83 billion. Additionally, the company’s adjusted net earnings were $8.20 billion, or $4.67 per share, representing year-over-year increases of 5.1% and 5.2%, respectively.

Street expects ABT’s EPS and revenue for fiscal 2029 to increase 15.1% and 8.2% year-over-year to $7.60 and $58.49 billion, respectively. It surpassed Street EPS and revenue estimates in three of the trailing four quarters. Over the past six months, the stock has gained 18.6% to close the last trading session at $123.22.

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 an A grade for Stability and a B for Quality. Within the same industry, it is ranked #13. To see ABT’s Growth, Value, Momentum, and Sentiment ratings, click here.

Stock #1: Embecta Corp. (EMBC)

EMBC is a medical device company that focuses on providing various solutions to enhance the health and well-being of people living with diabetes. Its products include pen needles, syringes, and safety injection devices, as well as digital applications to assist people in managing diabetes.

In terms of the trailing-12-month asset turnover ratio, EMBC’s 0.90x is 116.2% higher than the 0.42x industry average. Likewise, its 65.46% trailing-12-month gross profit margin is 12.5% higher than the 58.2% industry average. Moreover, its 7.55% trailing-12-month EBITDA margin is 31.9% higher than the 5.72% industry average.

During the fiscal fourth quarter ended September 30, 2024, EMBC’s revenues grew 1.5% year-over-year to $286.10 million, while its adjusted EBITDA for the quarter was $73 million. For the same period, the company’s adjusted net income and adjusted net income per share were $25.90 million and $0.45, respectively.

Analysts expect EMBC’s EPS for the quarter ending March 31, 2025, to increase 6.7% year-over-year to $0.72. Its revenue for the quarter ending June 30, 2025, is expected to rise 3.9% year-over-year to $283.21 million. EMBC surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 75.8% to close the last trading session at $19.13.

EMBC’s POWR Ratings reflect strong prospects. It has an overall rating of A, translating to a Strong Buy in our proprietary system.

It is ranked first in the Medical – Devices & Equipment industry. It has an A grade for Value and Quality and a B for Growth and Sentiment. Click here to see EMBC’s ratings for Momentum and Stability.

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ABT shares were trading at $124.77 per share on Friday afternoon, up $1.55 (+1.26%). Year-to-date, ABT has gained 10.89%, versus a 3.61% 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. More...

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