The healthcare market is undergoing a transformation fueled by technology and global healthcare challenges, with rising demand for innovative solutions driven by aging populations, chronic diseases, and value-based care.

Given this backdrop, it could be wise to consider investing in fundamentally strong healthcare stocks, Becton, Dickinson and Company (BDX), Zimmer Biomet Holdings, Inc. (ZBH), and Embecta Corp. (EMBC).

Advancements such as AI-driven diagnostic tools, wearable health monitors, and robotic surgical systems are transforming patient care. The FDA has approved 950 medical devices powered by AI and machine learning, offering quicker diagnoses, more accurate treatments, and enhanced patient outcomes.

Additionally, the global medical equipment calibration services market is expected to grow at a CAGR of 12.4% by 2035. The market is expected to grow as a result of rising regulatory requirements, growing patient safety and accuracy awareness, technological advancements in medical equipment, an increase in the outsourcing of calibration services, the aging population, and the burden of chronic diseases.

Given these favorable industry trends, let’s look at the fundamentals of three Medical – Devices & Equipment stocks, starting with the third stock. 

Stock #3: Becton, Dickinson and Company (BDX)

BDX develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products for healthcare institutions, physicians, life science researchers, clinical laboratories, the pharmaceutical industry, and the general public globally. It operates in three segments: BD Medical; BD Life Sciences; and BD Interventional.

On October 30, BDX launched the new BD Intraosseous Vascular Access System, which allows access to rapid delivery of fluids or medication in critical emergency circumstances. The procedure involves inserting a needle into the bone marrow cavity when intravenous (IV) access is challenging or delayed.

On October 14, BDX launched a new robotics solution to automate and standardize single-cell research. This first in a family of high-throughput, robotics-compatible reagent kits allows automation to ensure higher consistency and increased efficiency of large-scale, single-cell discovery studies.

The automation will standardize traditionally manual processes and help accelerate lab work leading to genomic sequencing.

During the fourth quarter that ended on September 30, 2024, BDX’s revenues increased 6.9% year-over-year to $5.44 billion. Its operating income grew 86.4% from the year-ago value to $650 million. The company’s net income applicable to common shareholders of $421 million indicates growth of 290.1% from the prior year’s quarter.

In addition, the company’s adjusted EPS from continuing operations came in at $3.81, up 11.4% year-over-year, respectively.

Analysts expect BDX’s revenue for the first quarter (ended December 2024) to grow 8.7% year-over-year to $5.12 billion. The company’s EPS is expected to increase 12% year-over-year to $3 for the ongoing period. Furthermore, the company surpassed the consensus EPS estimates in each of the trailing four quarters.

BDX’s shares have gained 1.7% over the past month to close the last trading session at $226.49.

BDX’s prospects are reflected in its POWR Ratings. The stock has a B grade for Growth, Sentiment, and Stability. Within the Medical – Devices & Equipment industry, BDX is ranked #46 out of 135 stocks. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

Click here to access additional BDX ratings for Value, Momentum, and Quality.

Stock #2: Zimmer Biomet Holdings, Inc. (ZBH)

ZBH operates as a medical technology company globally. It designs, manufactures, and markets orthopedic reconstructive products, like knee and hip products, S.E.T. products, and craniomaxillofacial and thoracic products. It also offers robotic, surgical, and bone cement products.

On November 25, ZBH announced U.S. FDA Premarket Approval Application (PMA) supplement approval for the Oxford Cementless Partial Knee. The partial knee allows surgeons to perform a PKR with improved fixation, better long-term implant survival rate, and improved efficiency in the operating room compared to the Oxford cemented partial knee procedure.

The Oxford cementless partial knee is now the only FDA-approved cementless partial knee implant in the United States. This marked a revolutionary step, offering patients a better range of motion, a more natural feel, and a more stable implant-to-bone fixation.

Also, on November 18, ZBH received the CE Mark certification for its Persona revision knee system. The addition to the Persona segment instills ZBH’s commitment to personalized solutions, offering surgeons advanced tools for revision knee arthroplasty.

For the third quarter of 2024, which ended September 30, ZBH’s total revenues increased 4% year-over-year to $1.82 billion. The company’s adjusted operating profit grew 3.5% from the year-ago value to $480.20 million. Adjusted net earnings of ZBH amounted to $353.20 million or $1.74 per common share, up 1.9% and 5.5% year-over-year, respectively.

In addition, the company’s free cash flow rose 64.3% from the prior year’s quarter to $310 million.

According to the company’s updated guidance for fiscal 2024, ZBH projects reported revenue change between 3.5% and 4%. It also expects adjusted EPS in the $7.95 – $8.05 range.

Street expects ZBH’s revenue and EPS for the fourth quarter (ending December 2024) to increase 3.9% and 4.3% year-over-year to $2.01 billion and $2.29, respectively. Moreover, the company topped the consensus revenue and EPS estimates in all four trailing quarters, which is impressive.

ZBH’s stock has plunged 1.1% intraday to close the last trading session at $104.46.

ZBH’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

ZBH has a B grade for Growth, Value, and Quality. It is ranked #30 in the same industry.

In addition to the POWR Ratings we’ve stated above, we also have ZBH ratings for Momentum, Stability, and Sentiment. Get all ZBH ratings here.

Stock #1: Embecta Corp. (EMBC)

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

For the fourth quarter of 2024, which ended on September 30, EMBC’s revenue increased 1.5% year-over-year to $286.10 million. Its adjusted net income for the quarter amounted to $25.90 million or $0.45 per share. Also, the company reported an adjusted EBITDA of $73 million.

The consensus revenue estimate of $1.12 billion for the fiscal year quarter (ending September 2026) represents a 1.3% increase year-over-year. The consensus EPS estimate of $2.81 for the same year indicates a 5.5% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.

Over the past six months, the stock has surged 70.6%, closing the last trading session at $20.25.

EMBC’s POWR Ratings reflect its bright outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. 

EMBC has an A grade for Value and Quality and a B for Growth and Sentiment. It is ranked first in the same industry. Click here to see the additional ratings for EMBC (Momentum and Stability).

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BDX shares were trading at $228.99 per share on Friday afternoon, up $2.50 (+1.10%). Year-to-date, BDX has gained 0.93%, versus a 0.99% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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