12 Best Medical Technology Stocks to Buy

Published on September 30, 2022 at 9:09 am by Usman Kabir in Hedge Funds, News

In this article, we discuss 12 best medical technology stocks to buy. If you want to read about some more medical technology stocks, go directly to 5 Best Medical Technology Stocks to Buy.

The medical technology industry can finally start to put the COVID-19 virus behind it after United States President Joe Biden admitted in a recent interview that the pandemic was over. Although the remarks have ignited a debate about the seriousness of his claim, since consensus on the issue is hard to find given recent data from the John Hopkins Institute indicates that 400 people still die of the virus every day, it is nonetheless an important policy statement. Mask mandates are slowly disappearing and the economy is almost fully back to normal.

Some of the medical technology stocks that can now start to shift their focus away from the pandemic towards other pipeline projects include Thermo Fisher Scientific Inc. (NYSE:TMO), Abbott Laboratories (NYSE:ABT), and Danaher Corporation (NYSE:DHR). According to research published by investment advisory Baird, US healthcare government grants, clinical trials, and outlays from the National Institutes of Health for the month of August all posted an increase compared to the figures for the same month last year.

Catherine Ramsey Schulte and Anju Mampilly, research analysts at Baird, said that the increases were a thematically positive sign for the industry. An interesting revelation in the report was that the fastest growing keyword among clinical trials during August was “sequencing”. This keyword had increased by 19% compared to the previous year, highlighting the importance that medtech firms are placing on emerging technologies as they seek to help humankind towards a better future.

Our Methodology

The companies that operate in the medical technology sector were selected for the list through a careful assessment of business fundamentals and analyst ratings to provide readers with some context for their investment choices. Hedge fund sentiment was included as a classifier as well. The hedge fund sentiment around each stock was calculated using the data of around 900 hedge funds tracked by Insider Monkey in the second quarter of 2022.

Photo by National Cancer Institute on Unsplash

Best Medical Technology Stocks to Buy

12. Abiomed, Inc. (NASDAQ:ABMD)

Number of Hedge Fund Holders: 30

Abiomed, Inc. (NASDAQ:ABMD) engages in the research, development, and sale of medical devices to assist or replace the pumping function of the failing heart. The firm features on the list of best medical technology stocks to invest in. On August 4, the firm posted earnings for the first fiscal quarter, reporting earnings per share of $1.25, beating estimates by $0.19. The revenue over the period was $277 million, up over 9% compared to the revenue over the same period last year.

On August 22, Piper Sandler analyst Matt O’Brien reiterated an Overweight rating on Abiomed, Inc. (NASDAQ:ABMD) stock with a $425 price target, highlighting the ambitious plans of the firm to build a premier heart failure company with opportunities for stock price appreciation.

At the end of the second quarter of 2022, 30 hedge funds in the database of Insider Monkey held stakes worth $1 billion in Abiomed, Inc. (NASDAQ:ABMD), compared to 24 in the previous quarter worth $1.3 billion.

Just like Thermo Fisher Scientific Inc. (NYSE:TMO), Abbott Laboratories (NYSE:ABT), and Danaher Corporation (NYSE:DHR), Abiomed, Inc. (NASDAQ:ABMD) is one of the best medical technology stocks to buy according to hedge funds.

11. Teladoc Health, Inc. (NYSE:TDOC)

Number of Hedge Fund Holders: 32

Teladoc Health, Inc. (NYSE:TDOC) provides virtual healthcare services in the United States and internationally. The company is one of the most prominent medical technology stocks to invest in. On August 26, the company announced that it would be teaming up with Cloud DX to provide remote monitoring solutions in Canada. As part of the deal, the existing RPM services of the Cloud DX platform in Canada will be enhanced with the virtual care capabilities of the latter to serve Canadian patients.

On September 15, KeyBanc analyst Scott Schoenhaus initiated coverage of Teladoc Health, Inc. (NYSE:TDOC) stock with a Sector Weight rating, stressing the fragmentation in the telehealth/digital health sector due to the emergence of new services.

At the end of the second quarter of 2022, 32 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Teladoc Health, Inc. (NYSE:TDOC), compared to 36 the preceding quarter worth $1.97 billion.

In its Q1 2022 investor letter, RiverPark Funds, an asset management firm, highlighted a few stocks and Teladoc Health, Inc. (NYSE:TDOC) was one of them. Here is what the fund said:

“Teladoc Health, Inc. (NYSE:TDOC) is the largest telehealth provider in the US and has recently begun to expand internationally. TDOC’s platform enables an ever-expanding list of patient-doctor interactions (including those for primary health care, mental health issues and chronic condition management) to transition from an on-site visit to one that can be done remotely with full video- based interaction. TDOC provides its platform of services on both a business-to-business and direct-to-consumer basis, through monthly subscription-based relationships. For its core business-to-business clients, the company contracts with a wide range of entities, including large scale employers (the company currently contracts with over 50% of the Fortune 500), health plans, health systems, and medical insurance companies, which currently cover more than 50 million members. For these customers, the company provides a win-win-win, as patients spend no time traveling and less time waiting, doctors are more efficient seeing more patients in less time, and payers (employers and plan sponsors) save money while being able to offer a highly popular additional benefit for their employees. This B to B market is projected to be a +$100 billion market opportunity and TDOC is the clear global market leader. For its direct-to- consumer clients, the company provides a growing suite of services for individuals to have affordable access to on-demand and scheduled medical services, for which their current insurance does not provide reimbursement (such as extended mental health counseling) (…read more)

10. Baxter International Inc. (NYSE:BAX)

Number of Hedge Fund Holders: 37

Baxter International Inc. (NYSE:BAX) develops and provides a portfolio of healthcare products worldwide. The firm is among the best medical technology stocks to invest in. Media reports indicate that the company is considering the sale of two key businesses related to kidney drugs. Per news platform Bloomberg, the firm is evaluating potential sales of the renal-care services and hemodialysis units. The segments are expected to be valued at well under $1 billion and may see interest from private equity shops.

On July 29, Cowen analyst Joshua Jennings maintained an Outperform rating on Baxter International Inc. (NYSE:BAX) stock and lowered the price target to $70 from $95, noting that macro factors have driven a significant EPS guidance revision for the firm.

At the end of the second quarter of 2022, 37 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Baxter International Inc. (NYSE:BAX), compared to 45 in the preceding quarter worth $2.8 billion.

In its Q3 2021 investor letter, Cooper Investors, an asset management firm, highlighted a few stocks and Baxter International Inc. (NYSE:BAX) was one of them. Here is what the fund said:

“During the quarter we exited our position in Baxter International Inc. (NYSE:BAX), having originally bought in 2017 as a Low Risk Turnaround with clear Stalwart attributes. In essence, the core businesses were highly durable, providing life sustaining or saving medical products such as IV medication or pumps and dialysis machines.

They had been mismanaged prior to the company spinning off its biopharmaceutical business in 2015 which had generated most of the Baxter’s operating profit. With a new CEO in Joe Almeida, who came with a successful track record leading another medical device company (Covidien) we identified three sources of value latency for the new standalone Baxter (…read more)

9. Edwards Lifesciences Corporation (NYSE:EW)

Number of Hedge Fund Holders: 39

Edwards Lifesciences Corporation (NYSE:EW) provides products and technologies for structural heart disease, critical care, and surgical monitoring. The firm is among the best medical technology stocks to invest in. On September 15, the company announced that it had won regulatory approval in the US for PASCAL Precision transcatheter, a valve repair system for transcatheter edge-to-edge repair. The system is used for patients with degenerative mitral regurgitation. It is also engineered with an intuitive catheter and handle.

On July 29, Citi analyst Joanne Wuensch maintained a Buy rating on Edwards Lifesciences Corporation (NASDAQ:EW) stock and raised the price to $118 from $115, highlighting the tough Q2 for the firm and stressing that it might reset guidance.

Among the hedge funds being tracked by Insider Monkey, Fisher Asset Management is a leading shareholder in Edwards Lifesciences Corporation (NYSE:EW), with 7.3 million shares worth more than $697 million.

In its Q4 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and Edwards Lifesciences Corporation (NYSE:EW) was one of them. Here is what the fund said:

“Innovation can foster growth in Health Care fields other than drug discovery. Edwards Lifesciences Corporation (NYSE:EW) makes minimally invasive devices to treat heart disease or for critical care monitoring. Its transcatheter heart valve, SAPIEN, is the most-implanted aortic heart valve in the world. Having settled a lawsuit with Abbott over alleged patent infringement, Edwards is now moving ahead with a newer product line called PASCAL to treat elderly or frail patients—for whom currently available treatments are ineffective—for mitral and tricuspid disease. PASCAL is the fruit of the company’s ongoing investment in research and development. Between PASCAL and its next-generation SAPIEN valve, the company expects to double its addressable market to approximately US$20 billion by 2028.”

8. Illumina, Inc. (NASDAQ:ILMN)

Number of Hedge Fund Holders: 44

Illumina, Inc. (NASDAQ:ILMN) provides sequencing and array-based solutions for genetic and genomic analysis. It is one of the top medical technology stocks to invest in. On September 29, the company revealed a new series of sequencing instruments. The new products, per the firm, can read an individual’s genetic information for $200 per genome. The two new models, under the new NovaSeq X Series product range, are the base machine NovaSeq X costing $985,000, and the more advanced NovaSeq X Plus, priced at $1.25 million.

On August 24, Credit Suisse analyst Dan Leonard initiated coverage of Illumina, Inc. (NASDAQ:ILMN) stock with a Neutral rating and a $230 price target, noting the positive outlook for the company due to sequencing, new product announcements, and conservative actions.

At the end of the second quarter of 2022, 44 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Illumina, Inc. (NASDAQ:ILMN), compared to 54 in the previous quarter worth $2.4 billion.

In its Q2 2022 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and Illumina, Inc. (NASDAQ:ILMN) was one of them. Here is what the fund said:

“Illumina, Inc. (NASDAQ:ILMN) enjoys an enviable recurring revenue model; sales of proprietary machinery bring customers onto its platform, but higher-margin consumables and services represent 80% of sales. The nature of the genetic sequencing business is such that as the cost of sequencing falls, demand increases because myriad new applications—from large population health studies to advanced areas of research such as single-cell analysis, proteomics, and spatial biology—become economically viable. Illumina has sustained strong earnings growth by using its technology and unmatched scale to keep its costs of production below those of its competitors while also capturing the lion’s share of increased volumes. Over the past five years, the company has grown revenues at a 14% annualized rate and generated US$3.5 billion cumulatively in free cash flow (…read more)

7. Veeva Systems Inc. (NYSE:VEEV)

Number of Hedge Fund Holders: 45

Veeva Systems Inc. (NYSE:VEEV) provides cloud-based software for the life sciences industry. On August 31, the firm posted earnings for the second quarter of 2022, reporting earnings per share of $0.56 and a revenue of $534 million, up over 17% compared to the revenue over the same period last year and beating analyst expectations by more than $3.5 million. The company is based in California and was founded in 2007. It has a market capitalization of close to $25 billion.

On September 9, KeyBanc analyst Scott Schoenhaus initiated coverage of Veeva Systems Inc. (NYSE:VEEV) stock with an Overweight rating and a $220 price target, noting that the company is suitable for providing SaaS solutions to the Life Sciences industry.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Echo Street Capital Management is a leading shareholder in Veeva Systems Inc. (NYSE:VEEV), with 757,605 shares worth more than $150 million.

In its Q2 2022 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Veeva Systems Inc. (NYSE:VEEV) was one of them. Here is what the fund said:

“Veeva Systems Inc. (NYSE:VEEV) is one of the highest quality franchises in our portfolio. The company has the dominant CRM platform for pharmaceutical sales and marketing organizations, and it is replicating that success with the rollout of numerous other modules focused on pharmaceutical customers’ manufacturing, quality, safety and clinical operations. Growth has temporarily slowed over the past year as the company laps difficult YoY comparisons caused by the rapid adoption of their virtual sales call solution during the pandemic. Several large deals also encountered unexpected delays in late 2021. Despite these short-term headwinds, we remain confident in Veeva’s future growth prospects and high-quality business model (~40% free cash flow margins supported by largely recurring subscription revenues). Meanwhile, we believe the defensive nature of its end market (health care) and strategic importance of cloud IT driven transformations could help buffer the company against a weaker global economy. As shares declined in Q2 along with other software stocks, we added to our position.”

6. Stryker Corporation (NYSE:SYK)

Number of Hedge Fund Holders: 46

Stryker Corporation (NYSE:SYK) operates as a medical technology company. On September 20, the firm revealed that it had been granted regulatory approval for the OptaBlate bone tumor ablation system. The addition of the tech to the portfolio of the firm expands on the core competencies in vertebral augmentation and radiofrequency ablation and completes the portfolio of treatment options for metastatic vertebral body fractures, per the medical technology company.

On September 14, Piper Sandler analyst Matt O’Brien maintained an Overweight rating on Stryker Corporation (NYSE:SYK) stock and raised the price target to $260 from $250, denoting the medical technology portfolios as the most sustainable and favorable for the firm.

Among the hedge funds being tracked by Insider Monkey, London-based firm Fundsmith LLP is a leading shareholder in Stryker Corporation (NYSE:SYK), with 6 million shares worth more than $1.2 billion.

In addition to Thermo Fisher Scientific Inc. (NYSE:TMO), Abbott Laboratories (NYSE:ABT), and Danaher Corporation (NYSE:DHR), Stryker Corporation (NYSE:SYK) is one of the best medical technology stocks to buy according to hedge funds.

In its Q2 2021 investor letter, Nelson Capital Management, an asset management firm, highlighted a few stocks and Stryker Corporation (NYSE:SYK) was one of them. Here is what the fund said:

“We bought a position in Stryker Corporation (NYSE:SYK), a medical device company that acts as a one-stop shop for hospitals and ambulatory surgery centers. Stryker is positioned to outperform due to higher anticipated demand for elective procedures.”

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