Increased investments and rapid technology integration have aided the medical devices industry’s rebound over the past year. In addition, the growing prevalence of chronic diseases and consequent increase in demand for advanced diagnosis and treatment are further aiding the industry’s rebound. The medical devices market is expected to reach $657.98 billion by 2028, registering a 5.4% CAGR.
Furthermore, several trends in the medical equipment and devices industry, such as enhanced cybersecurity, the emergence of the Internet of Medical Things (IoMT), and medical robots, should help the industry thrive.
Therefore, we think it could be wise to scoop up medical equipment stocks IDEXX Laboratories, Inc. (IDXX), Align Technology, Inc. (ALGN), and West Pharmaceutical Services, Inc. (WST). Though these stocks have witnessed significant price declines recently, we think they are well-positioned to gain substantially in the near term.
IDEXX Laboratories, Inc. (IDXX)
Incorporated in 1983, Westbrook, Maine-based pet healthcare company IDXX operates through CAG; Water Quality Products; Livestock, Poultry and Dairy; and other segments. Its segments offer services for veterinarians, the biomedical analytics market, and detection of various microbiological parameters in water. Also, the company provides diagnostic tests that are used to manage the health status of livestock and poultry.
This month IDXX expanded its reference laboratory menu of tests and services for veterinarians to meet the challenges of diagnosing and treating cancer. Through this expansion, IDXX should support veterinarians by providing innovations such as accessible genomic cancer diagnostic tests and services.
IDXX’s gross profit increased 11.9% year-over-year to $472.92 million for the third quarter, ended Sept. 30, 2021. The company’s income from operations grew 31.5% from its year-ago value to $225.96 million. Its operating profit rose 12.3% from the prior-year quarter to $223.85 million.
Analysts expect IDXX’s revenue to increase 11% year-over-year to $3.55 billion in fiscal 2022. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 25.2% in fiscal 2021 and 11.9% in fiscal 2022. The stock has declined 23.8% in price year-to-date and gained marginally over the past year.
IDXX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Quality and a B grade for Stability and Sentiment. We have also graded IDXX for Growth, Value, and Momentum. Click here to access all IDXX’s ratings. IDXX is ranked #15 of 165 stocks in the Medical – Devices & Equipment industry.
Align Technology, Inc. (ALGN)
ALGN is a global medical device company in San Jose, Calif., that manufactures and markets Invisalign clear aligners and iTero intraoral scanners and services for dentistry. The company operates in two segments, Clear Aligner; and Scanners and Services. ALGN sells its products in the United States, Switzerland, China, and internationally.
During the third quarter, ended Sept. 30, 2021, ALGN’s net revenues increased 38.4% year-over-year to $1.02 billion. The company’s gross profit grew 41.4% from its year-ago value to $755.16 million. Its income from operations rose 47.5% from the prior-year quarter to $261.16 million. Also, the company’s net income increased 29.8% year-over-year to $181 million.
ALGN’s revenue is expected to increase 22.2% year-over-year to $4.82 billion in fiscal 2022. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Furthermore, its EPS is expected to increase by 111.4% in fiscal 2021 and 20.8% next year. The stock has declined 14.9% in price over the past year and 29.6% year-to-date.
ALGN’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Sentiment and Quality.
In addition to the POWR Rating grades I have just highlighted, one can see ALGN’s ratings for Growth, Value, Stability, and Momentum here. ALGN is ranked #33 in the Medical – Devices & Equipment industry.
West Pharmaceutical Services, Inc. (WST)
WST provides technologically advanced containment and delivery solutions for injectable drugs and healthcare products to pharmaceutical, biotechnology, generic, and medical device companies. The Exton, Pa.-based company operates through the Proprietary Products; and Contract-Manufactured Products segments. Its products include primary packaging, reconstitution, drug delivery systems, contract manufacturing, analytical lab services, and integrated solutions.
Last October, WST unveiled its DeltaCube Modeling Platform and new NovaGuard SA Pro Safety System for ISO 0.5mL Standard Glass Syringes. The company believes that DeltaCube should address a series of customer challenges, where the solution takes previously underutilized data and turns it into a valuable tool for the customers.
WST’s net sales increased 28.9% year-over-year to $706.5 million for the third quarter, ended Sept.30, 2021. The company’s gross profit grew 48.1% from its year-ago value to $288.2 million. Its operating profit rose 82.9% from the prior-year quarter to $181.4 million. Also, the company’s net income increased 113.4% year-over-year to $175.6 million.
For its fiscal year 2022, analysts expect WST’s revenue to increase 8.8% year-over-year to $3.07 billion. It has surpassed the consensus EPS estimates in each of the trailing four quarters. In addition, the company’s EPS is estimated to increase 78.4% in fiscal 2021 and 6.7% next year. The stock has declined 21.6% year-to-date. However, the stock has gained 13.6% in price over the past nine months.
It is no surprise that WST has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Sentiment and a B grade for Growth and Quality.
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IDXX shares were trading at $507.48 per share on Monday afternoon, up $5.52 (+1.10%). Year-to-date, IDXX has declined -22.93%, versus a -8.12% 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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