The United States accounts for over half of all worldwide healthcare spending. While the COVID-19 pandemic has increased the significance of the healthcare industry, it posed significant challenges on medical devices companies, as treating COVID-19 gained priority over regular surgeries. However, with the gradual recovery in demand for medical devices, the global medical devices market is expected to reach $603.5 billion by 2023, registering a CAGR of 6.1%.

According to a Deloitte report, medical device companies have started using IoMT (Internet of Medical Things) for smart patient monitoring, diagnosis, treatment, and managing data distribution channels. Moreover, medical device companies are using metaverse components, mixed reality (MR) to assemble surgical tools and design operating rooms. This should also fuel the growth of the industry.

Therefore, Wall Street analysts expect quality medical device stocks Boston Scientific Corporation (BSX) and Zimmer Biomet Holdings, Inc. (ZBH) to rally by more than 35% in the near term.

Boston Scientific Corporation (BSX)

BSX is a developer, manufacturer, and marketer of medical devices used in a range of interventional medical specialties. The company operates through three segments – MedSurg; Rhythm and Neuro; and Cardiovascular. Balloon catheters, rotational atherectomy systems, embolic protection devices, and diagnostic catheters are some of the product offerings under BSX.

This month, BSX initiated the MODULAR ATP clinical trial to evaluate the safety, performance, and effectiveness of the mCRM Modular Therapy System. This trail studying communication between rhythm management devices should expand treatment options for patients who require an ICD.

BSX’s net sales for the third quarter ended September 30, 2021, increased 10.3% year-over-year to $2.93 billion. The company’s gross profit grew 13.5% from the year-ago value to $2.03 billion. Its operating income came in at $387 million, compared to an operating loss of $205 million in the prior-year quarter. Also, the company’s net income amounted to $419 million, compared to a net loss of $155 million in the third quarter of 2020.

BSX’s revenue increased 19.7% year-over-year to $11.86 billion in fiscal 2021. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Its EPS is expected to grow 67.7% in the current year. The stock has surged 20.9% over the past year and 15.2% year-to-date.

Closing the last trading session at $41.4, the average analyst price target of $57.27 represents a 38.3% potential upside.

Zimmer Biomet Holdings, Inc. (ZBH)

ZBH, with its subsidiaries, manufactures and markets musculoskeletal healthcare products and solutions. The company’s products are used to treat patients suffering from disorders of bones, joints, or supporting soft tissues. ZBH manages its operations in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.

During the third quarter ended September 30, 2021, ZBH’s net sales came in at $1.92 billion. Its operating expenses amounted to $214.9 million. Also, the company’s net earnings came in at $145.8 million, and its EPS amounted to $0.69 during the period.

Analysts expect ZBH’s revenue to increase 12% year-over-year to $7.87 billion in fiscal 2021. The company has beaten the consensus EPS in each of the trailing four quarters. Its EPS is expected to grow 30.5% in the current year. Moreover, the stock has gained 4.5% over the past month.

The consensus price target of $174.41 represents a 35.8% potential gain from the last closing price of $128.43.

BSX shares fell $0.03 (-0.07%) in after-hours trading Wednesday. Year-to-date, BSX has gained 15.88%, versus a 26.81% rise in the benchmark S&P 500 index during the same period.

About the Author: Priyanka Mandal

Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...

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