The medical device industry produces various devices used in day-to-day healthcare. The industry gained significant investors’ attention during the pandemic due to the rising sales of medical devices related to COVID-19 prevention and management.
Moreover, with the global healthcare industry expected to remain in the limelight amid robust demand due to an aging population and an uptick in chronic diseases, the medical devices industry is expected to benefit as medical equipment will be required to track, monitor, and diagnose diseases.
Also, the growing demand for homecare settings is boosting the market for portable healthcare devices. According to Statista, the medical devices segment revenue is expected to grow at a CAGR of 5.6% to reach $163.70 billion by 2023.
Amid this backdrop, investors could consider adding fundamentally strong medical device stocks Abbott Laboratories (ABT), Medtronic plc (MDT), and Utah Medical Products, Inc. (UTMD) to their watchlist.
Abbott Laboratories (ABT)
ABT discovers, develops, manufactures, and sells healthcare products worldwide. It operates in four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.
In terms of the trailing-12-month asset turnover ratio, ABT’s 0.61% is 81.8% higher than the 0.34% industry average. Likewise, its 58.16% trailing-12-month gross profit margin is 5.3% higher than the industry average of 55.24%.
ABT’s net sales increased 6.2% year-over-year to $33.56 billion for the nine months ended September 30, 2022. Its net earnings increased 16.1% year-over-year to $5.90 billion. Additionally, its EPS came in at $3.32, representing a 17.3% increase from the prior-year quarter.
ABT’s revenue for fiscal 2022 is expected to increase marginally year-over-year to $43.20 billion. It has an impressive earnings surprise history, surpassing the consensus EPS estimates in each of the trailing four quarters. The stock has gained 9.5% over the past three months to close the last trading session at $113.39.
ABT’s positive outlook is reflected in its POWR Ratings. The stock 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.
Within the Medical – Devices & Equipment industry, it is ranked #7 out of 146 stocks. It has an A grade for Sentiment and a B for Stability and Quality.
To see the additional ratings of ABT for Growth, Value, and Momentum, click here.
Medtronic plc (MDT)
Headquartered in Dublin, Ireland, MDT develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. It operates in four segments: Cardiovascular Portfolio; Medical Surgical Portfolio; Neuroscience Portfolio; and Diabetes Operating Unit.
In terms of the trailing-12-month EBITDA margin, MDT’s 29.05% is 679.6% higher than the 3.73% industry average. Likewise, its 67.50% trailing-12-month gross profit margin is 22.2% higher than the industry average of 55.24%.
MDT’s non-GAAP net income and EPS for the second quarter ended October 28, 2022, came in at $1.73 billion and $1.30, respectively. For the six months ended October 28, 2022, MDT’s operating profit increased 4.4% year-over-year to $2.53 billion.
Analysts expect MDT’s EPS for the quarter ending April 30, 2023, to increase 4.4% year-over-year to $1.59. Its revenue for the quarter is expected to come in at $7.99 billion. It has a commendable earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 4.7% over the past month to close the last trading session at $80.35.
MDT’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. It is ranked #25 in the same industry. In addition, it has a B grade for Value and Stability.
We have also given MDT grades for Growth, Momentum, Sentiment, and Quality. Get all MDT ratings here.
Utah Medical Products, Inc. (UTMD)
UTMD develops, manufactures, and distributes medical devices for the healthcare industry. The company offers labor and delivery tools, infant respiratory hoods, and blood pressure monitoring systems, among other instruments and supplies.
In terms of the trailing-12-month asset turnover ratio, UTMD 0.43% is 28.3% higher than the 0.34% industry average. Likewise, its 61.96% trailing-12-month gross profit margin is 12.2% higher than the industry average of 55.24%.
UTMD’s net sales increased 3% year-over-year to $12.96 million for the third quarter ended September 30, 2022. Its gross profit increased 1.4% year-over-year to $8.19 million. The company’s net income increased 1.8% year-over-year to $4.28 million. Moreover, its EPS increased 2.4% year-over-year to $1.178.
The stock has gained 12.5% over the past six months to close the last trading session at $92.99.
It is no surprise that UTMD has an overall A rating, which equates to a Strong Buy. It is ranked #2 in the Medical – Devices & Equipment industry. In addition, it has an A grade for Quality and a B for Stability and Sentiment.
Beyond what we stated above, we have also given UTMD grades for Growth, Value, and Momentum. Get all UTMD ratings here.
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ABT shares were trading at $112.06 per share on Wednesday afternoon, down $1.33 (-1.17%). Year-to-date, ABT has gained 2.53%, versus a 2.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions. More...
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