In this article, we will take a look at the 12 most promising medical stocks according to analysts.
Regardless of the short-term market situation, the healthcare industry has a huge growth potential. According to a report by McKinsey, healthcare profit pools are expected to grow at a CAGR of 4% from 2021 through 2026 to reach $790 billion. McKinsey said it expects the industry to face difficulties in 2023 amid rising inflation and labor shortages. However, the firm believes the industry will be able to overcome these problems in 2024 and beyond.
In 2022, the healthcare sector performed relatively well when compared to other sectors. A Wall Street Journal report in November 2022 highlighted that the healthcare industry was offering a refuge to investors who were getting hammered by losses in other industries. The report said that the S&P healthcare sector index was down 7.3% in 2022 through the start of November, outperforming the broader market by 14 percentage point, which was the widest gap since 2000.
The medical sector in the broader healthcare industry has long-term growth opportunities. The KPMG 2023 Healthcare and Life Sciences Investment Outlook report said that some of the important factors that are drawing the attention of leaders of the medical devices industry include innovation in diabetic care, robotic surgery, connected devices and cardiology.
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Our Methodology
For this article we first used the Finviz stock screener to list down all the stocks in the medical industry. We chose stocks from all categories of the industry — Medical Care, Medical Devices, Medical Distribution and Medical Instruments and Supplies. From the huge resultant dataset, we chose the stocks that have average analyst price targets 30% above their current prices as of February 15. We sorted the resultant list of stocks in descending order of market cap and picked top 12 stocks with the most upside potential.
Most Promising Medical Stocks According to Analysts
12. AdaptHealth Corp. (NASDAQ:AHCO)
Number of Hedge Fund Holders: 14
One-Year Price Target: $28.55
Medical equipment and supplies company AdaptHealth Corp. (NASDAQ:AHCO) ranks 12th in our list of the most promising medical stocks according to analysts. In January, AdaptHealth Corp. (NASDAQ:AHCO) commented on its preliminary Q4 results.
For the full year 2022, AdaptHealth Corp. (NASDAQ:AHCO) said it expects it net revenue to be near the midpoint of the previously-provided guidance range of $2.950 billion to $3.010 billion. The consensus for this figure was $2.98 billion.
For full-year 2023, AdaptHealth Corp. (NASDAQ:AHCO) expects revenue of $3.210 billion to $3.290 billion, versus the consensus estimate of $3.26 billion.
As of the end of the third quarter of 2022, 14 hedge funds reported having stakes in AdaptHealth Corp. (NASDAQ:AHCO). The total value of these stakes was $276 million. The biggest stakeholder of AdaptHealth Corp. (NASDAQ:AHCO) during this period was James E. Flynn’s Deerfield Management which owns a $154 million stake in AdaptHealth Corp. (NASDAQ:AHCO).
11. Inari Medical, Inc. (NASDAQ:NARI)
Number of Hedge Fund Holders: 20
One-Year Price Target: $90.63
California-based Inari Medical, Inc. (NASDAQ:NARI) makes devices for interventional treatment of venous diseases in the United States. Inari Medical, Inc. (NASDAQ:NARI) looks promising because its one-year estimated price target is $90.63, while it was trading at $53.92 as of the market close of February 13.
In January, Inari Medical, Inc. (NASDAQ:NARI) jumped after the company posted strong revenue for 2022 and gave an upbeat 2023 guidance.
According to Inari Medical, Inc. (NASDAQ:NARI)’s preliminary unaudited financials, Inari (NARI) projected revenue of $107 million to $108 million for the fourth quarter, while for the full year it was expecting revenue of $382.7 million – $383.7 million.
As of the end of the third quarter of 2022, 20 hedge funds tracked by Insider Monkey had stakes in Inari Medical, Inc. (NASDAQ:NARI). The total worth of these stakes was $147 million.
Here is what Baron Funds specifically said about Inari Medical, Inc. (NASDAQ:NARI) in its Q3 2022 investor letter:
“Inari Medical, Inc. (NASDAQ:NARI) makes catheter-based devices to remove clots from venous thromboembolism (VTE). VTE is the third most common vascular condition in the U.S. after heart attacks and strokes and if left untreated can be fatal. Shares held up well for the quarter. The company held an Investor Day where it unveiled products to enter several new addressable markets. The VTE treatment space is still in the early days of converting to devicebased interventions, and we believe Inari is well positioned to benefit.”
10. Azenta, Inc. (NASDAQ:AZTA)
Number of Hedge Fund Holders: 22
One-Year Price Target: $64.60
Azenta, Inc. (NASDAQ:AZTA) falls in the category of medical instruments and supplies industry segment. Earlier in February, Azenta, Inc. (NASDAQ:AZTA) posted its fiscal Q1 results. Azenta, Inc. (NASDAQ:AZTA) missed GAAP EPS and revenue estimates amid slow growth in the Life Science Services segment. Revenue nonetheless increased by 27% in the period on a YoY basis. Adjusted EPS in the period was $0.12.
At the end of the third quarter of 2022, 22 hedge funds out of the 920 funds tracked by Insider Monkey had stakes in Azenta, Inc. (NASDAQ:AZTA). The net worth of these stakes was over $171 million. The biggest stakeholder of Azenta, Inc. (NASDAQ:AZTA) during this period was Seth Rosen’s Nitorum Capital which owns a stake worth over $42 million in the company.
9. AtriCure, Inc. (NASDAQ:ATRC)
Number of Hedge Fund Holders: 22
One-Year Price Target: $61.00
Ohio-based AtriCure, Inc. (NASDAQ:ATRC) sells medical devices for surgical ablation of cardiac tissue and systems. AtriCure, Inc. (NASDAQ:ATRC) has lost about 32% over the past 12 months and its one-year price estimate shows attractive upside from current levels. In November, AtriCure, Inc. (NASDAQ:ATRC) posted Q3 results. Its GAAP EPS in the quarter came in at -$0.27, missing estimates by $0.02. Revenue in the period jumped about 18.1% to total $83.2 million, beating estimates by $1.88 million.
For full-year 2022, AtriCure, Inc. (NASDAQ:ATRC) said it expects revenue to come between $328 million to $333 million versus the consensus of $328.61 million.
At the end of the third quarter of 2022, 22 hedge funds among the 920 funds tracked by Insider Monkey reported having stakes in AtriCure, Inc. (NASDAQ:ATRC). The biggest hedge fund stakeholder of the company was Brian Ashford-Russell and Tim Woolley’s Polar Capital which owns a $22 million stake in the firm.
8. Warby Parker Inc. (NYSE:WRBY)
Number of Hedge Fund Holders: 23
One-Year Price Target: $19.64
Warby Parker Inc. (NYSE:WRBY) makes eyewear products and solutions. Warby Parker Inc. (NYSE:WRBY) falls in the industry classification of Medical Instruments & Supplies under the healthcare sector.
Warby Parker Inc. (NYSE:WRBY) had been under pressure as investors thought amid rising inflation, consumer discretionary spending will fall, hurting luxury companies. However, in December, Wolfe Research negated these concerns and set an Outperform rating on Warby Parker Inc. (NYSE:WRBY) with a $20 price target. The firm said that Warby Parker Inc. (NYSE:WRBY) is operating in $44 billion optical retail market which it thinks is “recession resistant.” The analyst firm sees a “multi-year unit growth opportunity with upside from vision care offerings” for Warby Parker Inc. (NYSE:WRBY).
7. Axonics, Inc. (NASDAQ:AXNX)
Number of Hedge Fund Holders: 25
One-Year Price Target: $83.56
California-based Axonics, Inc. (NASDAQ:AXNX) is working on implantable sacral neuromodulation (SNM) devices to treat patients with bladder and bowel dysfunction. Axonics, Inc. (NASDAQ:AXNX) has gained about 11% over the past one year. Recently, Axonics, Inc. (NASDAQ:AXNX)’s fourth-generation rechargeable sacral neuromodulation system (SNM) was approved by the FDA. SNM is a therapy to treat urinary incontinence.
In January, Axonics, Inc. (NASDAQ:AXNX) said it expects its Q4 revenue to come in the range of $85.6 million to $86.0 million, which will show an increase of about 61% on a YoY basis. The consensus estimate for this metric is $74.30 million.
As of the end of the third quarter of 2022, 25 hedge funds reported having stakes in Axonics, Inc. (NASDAQ:AXNX). The net worth of these stakes was about $309 million.
Carillon Tower Advisers made the following comment about Axonics, Inc. (NASDAQ:AXNX) in its Q3 2022 investor letter:
“Axonics, Inc. (NASDAQ:AXNX) was a strong performer during Q3. The company reported excellent quarterly earnings, as demand for the company’s recently introduced Sacral Nerve Modulation System remains high, as patients seek solutions for their urinary and bowel dysfunction. Clearly, this medical treatment is less discretionary compared to other medical procedures that can be delayed or rescheduled.”
6. Tandem Diabetes Care, Inc. (NASDAQ:TNDM)
Number of Hedge Fund Holders: 28
One-Year Price Target: $59.93
Tandem Diabetes Care, Inc. (NASDAQ:TNDM) makes medical devices addressing diabetes patients. In January, Wolfe Research started covering several medical companies in the diabetes industry, including Tandem Diabetes Care, Inc. (NASDAQ:TNDM). The firm gave a Peer Perform rating to Tandem Diabetes Care, Inc. (NASDAQ:TNDM). Tandem Diabetes Care, Inc. (NASDAQ:TNDM) recently reaffirmed its 2023 outlook. Tandem Diabetes Care, Inc. (NASDAQ:TNDM) expects its global non-GAAP sales to increase by 11%-12% compared to 2022.
As of the end of the third quarter of 2022, 28 hedge funds tracked by Insider Monkey reported owning stakes in Tandem Diabetes Care, Inc. (NASDAQ:TNDM).
Carillon Tower Advisers made the following comment about Tandem Diabetes Care, Inc. (NASDAQ:TNDM) in its Q3 2022 investor letter:
“Tandem Diabetes Care, Inc. (NASDAQ:TNDM) disappointed investors during the quarter with lackluster earnings. Tandem produces insulin pump systems for diabetic patients. Their growth in the US is slowing due to a new product being launched by a competitor. While market share doesn’t typically shift radically in this device market, investor sentiment is definitely strongly against Tandem for now.”
5. InMode Ltd. (NASDAQ:INMD)
Number of Hedge Fund Holders: 30
One-Year Price Target: $50.40
Israeli medical device company InMode Ltd. (NASDAQ:INMD) ranks 5th in our list of the most promising medical stocks according to analysts. InMode Ltd. (NASDAQ:INMD) was rising in early hours of February 14 after the company posted strong fourth quarter results. InMode Ltd. (NASDAQ:INMD)’s adjusted EPS in the period came in at $0.78, beating estimates by $0.09. Revenue in the quarter jumped about 21% on a YoY basis to total $133.57 million, beating estimates by $3.93 million.
InMode Ltd. (NASDAQ:INMD) also gave full-year 2023 guidance. InMode Ltd. (NASDAQ:INMD) expects revenue in the period to come between $525 million and $530 million while the consensus estimate for this metric is $528.84 million.
4. AMN Healthcare Services, Inc. (NYSE:AMN)
Number of Hedge Fund Holders: 33
One-Year Price Target: $148.00
AMN Healthcare Services, Inc. (NYSE:AMN) is one of the most promising medical stocks according to analysts, as its average price target for one year stands at $148. In November, AMN Healthcare Services, Inc. (NYSE:AMN) posted its third quarter results. Adjusted EPS in the period came in at $2.57, beating estimates by $0.17. Revenue in the period jumped about 30% on a YoY basis to total $1.14 billion, beating estimates by $40 million. For the fourth quarter, AMN Healthcare Services, Inc. (NYSE:AMN) was expecting its revenue to come between $1.050 – $1.080 billion versus the consensus estimate of $1.03 billion.
As of the end of the September quarter of 2022, 33 hedge funds tracked by Insider Monkey reported owning stakes in AMN Healthcare Services, Inc. (NYSE:AMN). This was up from 26 hedge funds that had stakes in AMN Healthcare Services, Inc. (NYSE:AMN) at the end of the second quarter. This shows that hedge fund sentiment is strong for AMN Healthcare Services, Inc. (NYSE:AMN).
Diamond Hill Capital made the following comment about AMN Healthcare Services, Inc. (NYSE:AMN) in its Q3 2022 investor letter:
“New positions initiated in Q3 included Ciena Corporation (long), AMN Healthcare Services, Inc. (NYSE:AMN) (short), CBIZ Inc (short), Asana (short) and Palomar (short). AMN Healthcare Services provides workforce solutions and staffing services at healthcare facilities. An unstable healthcare employment environment is driving pricing and volume growth for contract labor, which we believe is unsustainable.”
3. iRhythm Technologies, Inc. (NASDAQ:IRTC)
Number of Hedge Fund Holders: 33
One-Year Price Target: $145.67
iRhythm Technologies, Inc. (NASDAQ:IRTC) is a heart-monitoring medical solutions company. Wells Fargo recently initiated covering the stock with an Outperform rating. Wells Fargo’s analyst Nathan Treybeck said iRhythm Technologies, Inc. (NASDAQ:IRTC)’s patch monitors Zio XT and Zio AT have good patient compliance and provide important metrics for physicians. The analyst thinks iRhythm Technologies, Inc. (NASDAQ:IRTC) has the potential to double its US penetration in the ambulatory cardiac monitoring market by 2027. He has a $150 price target on iRhythm Technologies, Inc. (NASDAQ:IRTC). The analyst also praised iRhythm Technologies, Inc. (NASDAQ:IRTC)’s AI capabilities.
AI is the talk of the town in 2023 and iRhythm Technologies, Inc. (NASDAQ:IRTC) could leverage its presence in the AI healthcare market and expand into new, innovative areas.
2. ShockWave Medical, Inc. (NASDAQ:SWAV)
Number of Hedge Fund Holders: 34
One-Year Price Target: $243.25
Cardiovascular medical device company ShockWave Medical, Inc. (NASDAQ:SWAV) ranks 2nd in our list of the 12 most promising medical stocks according to analysts. In January, BofA reiterated its Buy rating on ShockWave Medical, Inc. (NASDAQ:SWAV) and said that the selloff after the company’s acquisition of Neovasc (NASDAQ:NVCN) is unfounded. BofA analyst Travis Steed said that he does not see the buyout of Neovasc as a sign of ShockWave Medical, Inc. (NASDAQ:SWAV)’s worries about its core Intravascular Lithotripsy (IVL) growth outlook.
As of the end of the third quarter of 2022, 34 hedge funds among the 920 funds tracked by Insider Monkey reported owning shares of ShockWave Medical, Inc. (NASDAQ:SWAV).
Carillon Eagle Small Cap Growth Fund made the following comment about ShockWave Medical, Inc. (NASDAQ:SWAV) in its Q4 2022 investor letter:
“ShockWave Medical, Inc. (NASDAQ:SWAV) develops products to treat calcified cardiovascular disease. Despite reporting extraordinary revenue growth in the quarter, the magnitude of the increase and the forward guidance given were not enough for elevated expectations, and investors who had made money in the stock through early November decided to take some profits.”
1. Option Care Health, Inc. (NASDAQ:OPCH)
Number of Hedge Fund Holders: 36
One-Year Price Target: $38.17
Illinois-based medical care facilities company Option Care Health, Inc. (NASDAQ:OPCH) provides infusion services. In October, Option Care Health, Inc. (NASDAQ:OPCH) posted its third quarter results. GAAP EPS in the quarter came in at $0.20, meeting estimates. Revenue in the quarter jumped about 14.4% to total $23.72 million. For the full-year 2022, Option Care Health, Inc. (NASDAQ:OPCH) revised its guidance. Option Care Health, Inc. (NASDAQ:OPCH) now expects net revenue for the period to come in between $3.90 billion to $3.95 billion, compared to its prior guidance of $3.85 billion to $3.95 billion. The consensus estimate for this metric is $3.92 billion. Adjusted EBITDA for the period is expected to come between $336 million to $341 million
A total of 36 hedge funds tracked by Insider Monkey reported having stakes in Option Care Health, Inc. (NASDAQ:OPCH) at the end of the third quarter of 2022. The total value of these stakes at the end of the quarter was $627 million.
Baron Funds made the following comment about Option Care Health, Inc. (NASDAQ:OPCH) in its Q4 2022 investor letter:
“We initiated a position in Option Care Health, Inc. (NASDAQ:OPCH), the largest independent player in the $15 billion U.S. home and alternate site infusion market. We believe Option Care is well positioned to capitalize on the ongoing shift to lower-cost sites of care and the proliferation of new specialty drug treatments. Home infusions cost 40% to 70% less than infusions at a hospital. Option Care’s footprint, with over 150 locations, allows it to serve roughly 96% of the U.S. population in a market growing 5% to 7% a year. The company has a well-diversified portfolio of therapies and provider relationships with no customer concentration, enjoys in-network status with all larger payors, and has low direct government reimbursement risk as Medicare currently does not cover home infusion. We estimate the market would double if this were to occur in the future. Given its geographic coverage and therapeutic expertise, the company is assured a seat at the table to discuss new innovative episodic or fully capitated models with payors. It also has strong relationships with relevant drug manufacturers, facilitating early access to newly approved drugs and preferred supply arrangements, while its size and scale provide purchasing power. Management believes the company can continue to generate high single-digit organic revenue growth and mid-teens EBITDA growth. There is also an opportunity to enhance growth through M&A. The company has an excellent track record of acquiring and integrating acquisitions and, with 45% of its market still made up of regional and local providers, there is a meaningful consolidation opportunity.”
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Disclosure: None. 12 Most Promising Medical Stocks According to Analysts is originally published on Insider Monkey.
