Increased capital investments and rapid technology integration have helped the medical devices industry to grow substantially over the past year. And as the economy recovers from the COVID19 pandemic, aided by…
a strong vaccination drive, non-emergency medical procedures are being rescheduled, driving up the nationwide demand for medical devices.
With breakthrough capabilities and tech integration, state-of-the-art medical devices are expected to drive the global healthcare industry’s growth. The medical devices sector is expected to grow at a 5.2% CAGR to $671.49 billion by 2027.
Investors are bullish on the medical devices industry, as evidenced by the SPDR S&P Health Care Equipment ETF’s (XHE) 37.6% gains over the past year versus the broader SPDR S&P 500 ETF Trust’s (SPY) 33.7% returns. Thus, we think fundamentally sound stocks in this space ResMed Inc. (RMD – Get Rating), Alcon Inc. (ALC – Get Rating), Terumo Corporation (TRUMY – Get Rating), and West Pharmaceutical Services, Inc. (WST – Get Rating), are expected to keep soaring in price.
RMD manufactures medical equipment and software to treat patients afflicted with Sleep Apnea and other chronic diseases. The company operates in two segments—the sleep and respiratory care segment and the software-as-a-service segment. RMD is headquartered in San Diego, Calif.
In August, RMD launched its next-generation Positive Airway Pressure (PAP) device for sleep apnea patients. The device has features such as a personal therapy assistant and remote software up-gradation. This digital health device can be expected to generate greater revenue for RMD.
On September 8, an ALASKA study conducted in France reported that using RMD’s PAP treatment can increase the chance of survival for sleep apnea patients. This study reflects how important it is to diagnose and treat sleep apnea for a large base of customers.
In the fourth fiscal quarter, ended June 30, RMD’s net revenue increased 13.7% year-over-year to $876.10 million. Its non-GAAP income from operations rose 7% from the prior-year quarter to $260.40 million. The company’s non-GAAP net income increased 2.7% from its year-ago value to $198.45 million, while its non-GAAP EPS came in at $1.35, up 1.5% from the same period last year.
A $1.36 consensus EPS estimate for the current quarter (ending September 2021) indicates a 7.1% year-over-year increase. Likewise, the $866.33 million consensus revenue estimate for the current quarter reflects a 21.9% rise from the prior-year quarter. Furthermore, RMD has an impressive surprise earnings history; it has topped the consensus EPS estimates in all four trailing quarters. RMD’s stock has gained 68% in price over the past year to close yesterday’s trading session at $288.90.
RMD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
RMD has a B grade for Stability, Sentiment, and Quality. It is ranked #18 of 182 stocks in the Medical – Devices & Equipment industry. We have also graded RMD for Growth, Value, and Momentum. Click here to access all RMD’s ratings.
ALC provides innovative technologies and equipment for eye care. Its products are categorized into two segments: Surgical and Vision Care. The company is headquartered in Geneva, Switzerland. ALC was created from a spin-off of pharmaceuticals company Novartis AG (NVS) in 2019.
In April, ALC obtained the commercialization rights in the United States for the glaucoma eye-drop Simbrinza® from Novartis, expanding its eye drop portfolio. It also announced the launch of its new lubricant eye-drop. The new eye-drop, along with Simbrinza, is expected to propel ALC to substantial gains.
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