The medical device sector is experiencing a notable surge in value, according to financial expert Jim Cramer of CNBC. Cramer highlighted the positive earnings reports of various medical device companies, indicating a growing bullish trend. This article examines the factors contributing to this market's growth and identifies key companies that have demonstrated promising performance.
A Potential Bull Market
Cramer emphasized the emergence of a bullish market in medical devices, noting the consistently positive earnings results shared by multiple companies in the industry. He expressed his hope for a debt ceiling-related sell-off, which would temporarily lower market prices and present investors with an opportunity to purchase medical device stocks at discounted prices.
Non-Urgent Surgeries Rebound
In the wake of the pandemic, hospitals faced overwhelming challenges, leading to the deferral of non-essential surgeries. As the crisis subsided, the resumption of these non-urgent procedures fueled an increase in the sale of medical devices. This rebound has contributed to solid earnings and overall growth of the industry.
Here we discuss four Medical Device companies — InMode INMD, Johnson & Johnson JNJ, Intuitive Surgical ISRG and GE HealthCare GEHC — that have strong potential to gain going forward on the back of a recovery in demand for surgeries.
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InMode Capitalizes on Minimally-Invasive Radio Frequency Devices
Cramer highlighted InMode as one of the companies benefiting from market growth. InMode is renowned for its development of minimally-invasive radio frequency devices primarily used in cosmetic surgery. The company's recent earnings report indicated a 43% rise in consumables and service revenues. Though INMD’s stock declined following the report, Cramer attributed this to conservative projections by the company's executives and considered it an opportunity to purchase InMode stock at an undervalued price, which is down 9.6% so far this year.
InMode Ltd. Price
InMode Ltd. price | InMode Ltd. Quote
Johnson & Johnson Sees Success of Medical Devices Division
Cramer pointed out Johnson & Johnson as another potential beneficiary of the bullish market. In April, the company reported better-than-expected quarterly results, partially driven by the success of its medical devices division. Cramer noted that while JNJ is currently dealing with legal challenges related to its talc products and their potential link to ovarian cancer, the primary concern lies in litigation risks rather than earnings. J&J is down 12.6% so far this year.
Johnson & Johnson Price
Johnson & Johnson price | Johnson & Johnson Quote
Intuitive Surgical Records Impressive Growth in Robotic Surgery
Intuitive Surgical, the manufacturer of the robotic Da Vinci Surgical System, delivered a remarkable quarter, surpassing expectations. Although the number of robotic surgery systems sold by ISRG remained consistent with the previous year, there was a significant 26% increase in the number of procedures performed worldwide. Cramer highlighted the company's strong performance, with Intuitive Surgical's stock experiencing a 14.4% increase year to date.
Intuitive Surgical, Inc. Price
Intuitive Surgical, Inc. price | Intuitive Surgical, Inc. Quote
GE HealthCare Diagnostic Equipment Division in Focus
Cramer also mentioned GE HealthCare as a company of interest. GE HealthCare's exceptional diagnostic equipment division, which includes a range of scanners crucial for detecting and monitoring Alzheimer's disease, is likely to be the key factor driving GEHC’s performance going forward. Cramer predicted an increasing demand for these machines as the FDA approves more Alzheimer's drugs, underscoring the importance of monitoring the effectiveness of new medications. GE HealthCare has gained 32% so far this year.
GE HealthCare Technologies Inc. Price
GE HealthCare Technologies Inc. price | GE HealthCare Technologies Inc. Quote
The medical device industry is currently witnessing the start of a bullish market, backed by positive earnings reports from various companies. Factors such as the rebound of non-urgent surgeries and advancements in medical technology contribute to the sector's growth. Investors are keeping a close eye on companies like InMode, Johnson & Johnson, Intuitive Surgical, and GE HealthCare, which have demonstrated a strong performance and hold potential for future success.
While InMode carries a Zacks Rank #2 (Buy), the remaining three companies currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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