According to analysts at RW Baird, 2024 is expected to be a rewarding year for some prominent medtech firms, as advancements in medical technologies continue to shape the healthcare landscape. Despite lagging behind broad indexes like the S&P 500, companies specializing in insulin pumps and glucose monitors are poised for growth in the years to come.
Last summer, investors showed a lack of interest in manufacturers of diabetes and cardiac-disease devices, underestimating their potential due to the emergence of new weight-loss drugs developed by industry giants Eli Lilly and Novo Nordisk. However, revenue has been steadily increasing for noteworthies such as Insulet, a renowned pump maker, and Boston Scientific, a pioneering cardiovascular-repair company.
RW Baird predicts that the impressive growth observed in these companies will persist throughout 2024 and beyond, even before the full impact of the new obesity drugs, known as GLP-1s, is felt among disease populations. Acknowledging this potential, RW Baird’s outlook report awarded an Outperform rating to Boston Scientific stock and upgraded Insulet stock from Neutral to Outperform.
While ongoing research is still required to fully comprehend the effects of GLP-1s in the MedTech industry, Jeff Johnson and David Rescott from RW Baird assert that investors are now better apprised of the lasting global burden of obesity. Therefore, the demand for medical technologies is unlikely to subside anytime soon.
In conclusion, medtech companies specializing in insulin pumps and glucose monitors are expected to experience significant growth in the coming years. As the healthcare industry continues to evolve, these innovations will play a crucial role in addressing global health challenges. Investors are recommended to consider the promising prospects of Boston Scientific and Insulet stocks when making informed financial decisions.
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Insulet Stock Shows Promise for Growth
Despite experiencing a decline of nearly 25% this year, Insulet stock has recently regained some of its summer GLP-1 losses, reaching a level of $220. Analysts remain optimistic about the company’s future, anticipating a 26% growth in sales by 2023, amounting to $1.65 billion. Furthermore, earnings are expected to rise by 45%, reaching $1.88 per share, excluding nonrecurring charges.
The rising popularity of insulin pumps among diabetes patients, along with the trend of connecting these pumps to glucose monitors, is likely to sustain Insulet’s sales growth at an annual rate of approximately 20% over the next few years. Baird analyst Johnson predicts that earnings will grow even faster, prompting a strong belief that the stock will return to a premium valuation level. Specifically, Johnson anticipates that the stock will reach $238 next year, representing an increase from the current price.
In addition to Insulet, Johnson also holds an Outperform rating for glucose-monitor maker DexCom. After hitting a low of $75 in October, the stock has recovered to $123. Johnson foresees expanding margins for DexCom as sales continue to grow above 20% over multiple years. While the impact of GLP-1s may eventually be felt, Johnson sets a price target of $161 for DexCom, indicating potential for further growth.
Another recommendation comes from Baird colleague Rescott, who favors diversified device-maker Boston Scientific. Rescott projects that the stock can rise to $64 from its current level of $56 as the company prepares to launch new products in 2024. These offerings will include solutions for mending heart arrhythmias and heart valves. With accelerated sales expected in the second half of the year, Rescott predicts that earnings per share will increase from around $2.00 in 2023 to $2.26 in 2024.
Overall, Rescott views Boston Scientific as a top-tier medtech business, emphasizing its potential for success in the market.