Even though the resurgence of COVID-19 cases is causing widespread concern, many patients are now rescheduling their non-COVID-19 medical procedures thanks to solid progress on the vaccination front. This is driving an increase in demand for medical equipment. In addition, the rising prevalence of chronic diseases and an emphasis on early diagnosis and treatment are contributing to the industry’s recovery.
Investors’ interest in the industry is evidenced by the SPDR S&P Health Care Equipment ETF’s (XHE) 5.6% gains over the past month, versus the SPDR S&P 500 Trust ETF’s (SPY) marginal returns. Furthermore, the industry is expected to grow exponentially due to the integration of advanced technologies. According to a Research and Markets report, the global medical device market will reach $745 billion by 2030.
So, it could be wise to scoop up the shares of fundamentally strong medical equipment companies Conformis, Inc. (CFMS), Harvard Bioscience, Inc. (HBIO), and Accuray Incorporated (ARAY). These stocks are currently trading at less than $10 per share.
Conformis, Inc. (CFMS)
CFMS in Bedford, Mass., is a medical technology company that develops, manufactures and sells joint replacement implants. It provides personalized knee replacement products, such as iTotal CR, iTotal PS, and iDuo. In addition, it provides Conformis Hip System and Cordera hip replacement products.
CFMS entered an exclusive distribution agreement with XR Medical Group Limited in June, representing its expansion in the Asia-Pacific region. Mark Augusti, CFMS’ President and CEO, said, “This distribution agreement is another example of progress as we execute our overall growth strategy. We are confident that our unique product portfolio will serve to accelerate Conformis’ international growth.”
CFMS’ total revenues increased 189.4% year-over-year to $56.35 million for the second quarter, ended June 30, 2021. Its gross profit increased 331.5% year-over-year to $47.54 million. Its net income came in at $38.04 million, versus a $2.14 million loss in the year-ago period, while its EPS came in at $0.21, compared to a $0.03 loss in the prior year quarter.
For Its fiscal year 2021, CFMS’ revenue and EPS are expected to grow 54.3% and 102.9%, respectively, year-over-year to $106.08 million and $0.01. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 181.5% in price to close yesterday’s trading session at $1.82.
It’s no surprise that CFMS has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. In addition, it has a B grade for Growth, Quality, Value, and Sentiment.
Harvard Bioscience, Inc. (HBIO)
HBIO develops, manufactures, and sells technologies, products, and services that enable fundamental research, discovery, and pre-clinical testing for drug development. The Holliston, Mass., company sells its products primarily under Harvard Apparatus, Biochrom, Hoefer, Panlab, Warner Instruments, and Hugo Sachs Elektronik brand names.
Jim Green, HBIO’s Chairman and CEO, said on August 5, “Expanding demand from CRO/pharma combined with continuing academic lab recovery and a strong backlog supports our improving revenue outlook in spite of global supply disruptions; we now expect revenue growth of 12% to 15% for fiscal 2021 compared to 2020.”
For its second quarter ended, June 30, 2021, HBIO’s total revenues increased 25.3% year-over-year to $29.20 million. The company’s gross profit was $16.35 million, up 18% year-over-year. Also, its adjusted EPS came in at $0.06, up 20% year-over-year.
HBIO’s revenue is expected to grow 14.1% year-over-year to $116.49 million in its fiscal year 2021. Its EPS is estimated to grow 81.2% year-over-year to $0.29 in the current year. Also, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 93.4% in price to close yesterday’s trading session at $7.87.
HBIO’s POWR ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Growth, and a B grade for Value and Sentiment.
Accuray Incorporated (ARAY)
ARAY develops, manufactures, and sells medical devices used in radiation therapy to treat cancer patients. The company’s products include CyberKnife System, TomoTherapy System, and the Radixact Delivery Treatment Platform. ARAY is headquartered in Sunnyvale, Calif.
On September 14, data from the Prostate Advances in Comparative Evidence (PACE) indicated that ARAY’s CyberKnife robotic radiotherapy platform is superior to conventional linear accelerators in reducing the incidence of late grade two or higher bladder toxicity. So, the platform is expected to provide it an edge over its peers.
ARAY’s total revenue increased 16.8% year-over-year to $110.94 million for its fiscal fourth quarter, ended June 30, 2021. The company’s gross profit came in at $43.73 million, up 10% year-over-year. Also, its gross orders increased 19.5% year-over-year to $112.67 million.
Analysts expect ARAY’s revenue to be $440.92 million in its fiscal year 2023, representing a 6% year-over-year rise. In addition, the company’s EPS is expected to increase 450% year-over-year to $0.11 in the next year. Also, it surpassed the Street’s EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 51.5% in price to close yesterday’s trading session at $3.50.
ARAY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
In addition, ARAY has an A grade for Value. Within the Medical – Devices & Equipment industry, it is ranked #50. Also, click here to see the additional POWR Ratings for Stability, Momentum, Growth, Quality, and Sentiment for ARAY.
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CFMS shares were trading at $1.83 per share on Friday morning, up $0.01 (+0.55%). Year-to-date, CFMS has gained 177.27%, versus a 19.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...
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