In this article, we will look at the 11 Best Medical Device Stocks to Buy Now.
Trump’s Tariffs Are Dividing the Medical Community
On April 16, CNBC reported that Trump’s tariffs are building a divide in the medical community. The first Trump administration did not impose tariffs on medical devices and protective gear manufactured in Mexico, China, and Canada. However, the sector has not received a reprieve from the president’s newest round of duties so far. This has resulted in a division: since device makers could potentially face significant challenges from tariffs, they are pushing back for a way out. In contrast, personal protective equipment manufacturers stand to benefit from the barriers created by the levies, which is why they are not showing signs of a push back.
The medical community is thus presenting a dichotomy in the face of tariffs. CNBC reported that the duties could also raise costs for hospitals, and in turn, patients, ultimately reducing access to critical care and equipment. Scott Whitaker, CEO of AdvaMed, the trade group representing medical technology and device makers, said the following about the situation:
“MedTech supply chain leaders are already reporting supply chain concerns, and we cannot afford to drive up the cost of health care for patients, or on the health care system. The reality is, any increased costs will be largely borne by taxpayer-funded health programs like Medicare, Medicaid, and the VA.”
Hospital trade groups are also voicing their concerns, warning that tariffs could bring the quality of care down. CNBC reported that Rick Pollack, the CEO of the American Hospital Association, opined:
“The AHA has and will continue to share with the Administration, disruptions in the availability of these critical devices — many of which are sourced internationally — have the potential to disrupt patient care. AHA continues to push for a tariff exemption for medical devices to ensure that hospitals and health systems can continue to serve their patients and communities.”
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Pricing Complexity in the Medical Device Sector
President Trump imposed a 25% tariff on imported goods from Mexico and Canada in February, later delaying levies on a number of items falling under the US-Mexico-Canada Agreement. However, Chinese goods have not seen any reprieve. In fact, the new levies imposed in Trump’s second term have brought the total tariff rate up to 145%. While a way out of the present conditions is to raise prices to offset the rising expenses from tariffs, a range of hospitals and other organizations buying medical equipment cannot do so. These institutions are thus likely to face complications passing on higher costs under the current insurance coverage contracts with locked-in yearly prices.
Casey Hite, CEO of Aeroflow Health, a firm that provides insurance-covered medical devices, said the following:
“With the level of tariffs that we’re looking at in China, businesses are going to be completely upside down on these products … they can’t pass those costs on to the consumer. I think what we would like to see, more than anything, is a runway or some predictability. Let’s do this over the next 12 months, next two years, so that US organizations can prepare.”
With these trends in view, let’s look at the 11 best medical device stocks to buy now.
A specialist operating a modern medical device in a clinical setting.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 25 best medical device stocks and then chose the top 11 with the highest number of hedge fund holders as of Q4 2024. We sourced the hedge fund sentiment data from Insider Monkey’s database. The list is ordered in ascending order of hedge fund sentiment.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
11 Best Medical Device Stocks to Buy Now
11. Zimmer Biomet Holdings, Inc. (NYSE:ZBH)
Number of Hedge Fund Holders: 53
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) designs, manufactures, and markets orthopedic reconstructive products. It also offers biologics, extremities, sports medicine, dental implants, trauma products, and related surgical products.
The company leads the orthopedic sector with a 36% share in knee implants and a 23% share in hip implants. Zimmer Biomet Holdings, Inc. (NYSE:ZBH) also holds a competitive market advantage due to its regulatory expertise, as the development of medical implants requires a lengthy FDA approval process, creating a natural barrier to entry and limiting competition.
On April 25, BTIG analyst Ryan Zimmerman maintained a Buy rating on Zimmer Biomet Holdings, Inc. (NYSE:ZBH) and set a price target of $123.00. The analyst said that the company’s recent strategic product introductions in the hip replacement sector position it well to regain market share.
The company has launched innovative products such as the Z1 Triple Taper Stem, HAMMR, and OrthoGrid, which have received generally optimistic feedback from orthopedic surgeons. The products can improve Zimmer Biomet Holdings, Inc.’s (NYSE:ZBH) competitive position, supporting the Buy rating.
10. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 66
Abbott Laboratories (NYSE:ABT) discovers, develops, manufactures, and sells healthcare products. Its Medical Devices segment manages the global sale of products related to heart failure, electrophysiology, rhythm management, structural heart, vascular, neuromodulation, and diabetes care.
On May 5, Analyst Larry Biegelsen of Wells Fargo maintained a Buy rating on Abbott Laboratories (NYSE:ABT), retaining the price target of $147.00. The analyst said the company’s recent legal victory, the favorable summary judgment in the first MDL NEC case, reflects a positive outlook for similar pending cases. The decision reinforced Abbott Laboratories’ (NYSE:ABT) position, stating that their formula was not defective and that any other safer alternative was not feasible.
The analyst reasoned that the difficulty for plaintiffs to come up with a more favorable record translates to a strong defense for the company in future litigations. Abbott Laboratories (NYSE:ABT) further boasts a strengthening market position due to a lack of adequate donor breast milk in hospitals, which supports the continued use of formula. These market and legal factors bolster an optimistic investment outlook for the company, ranking it tenth on our list of the best medical device stocks to buy now.