The Zacks Medical - Products industry is grappling with a challenging operating environment amid rising tariff concerns, as the United States has imposed significant tariffs on multiple trading partners, including China, Europe and India. The rising tariff rates are hurting margins of several medical device makers, inlcuding GE HealthCare, Baxter and Abbott.

Meanwhile, the medical device-makers face a continuous rise in commodity and manufacturing costs post COVID-19, particularly in consumer-facing areas like Nutrition. Moreover, price hikes implemented to offset these costs are sometimes leading to volume constraints as consumers become more price-sensitive. In addition to these, China’s Volume-Based Procurement policy is creating significant headwinds for established products.

Yet, despite these obstacles, firms are mitigating headwinds through product innovation and rising adoption of AI and digital services. Meanwhile, the rise of GLP-1 medication is acting as a tailwind for certain medical device sectors, like CPAP therapy. The rising use of these drugs is driving awarness among patients for other helath-problems, thereby encouraging patient to engage with primary care physicians.

Moreover, the rise in aging population is driving demand for chronic condition management, such as cardiovascular care, diabetes and respiratory health. The shift toward Ambulatory Surgery Centres (ASCs) in the United States due to efficiency and lower costs looks encouraging.

Boston Scientific (BSX Quick QuoteBSX - Free Report) , ResMed (RMD Quick QuoteRMD - Free Report) , Phibro Animal Health (PAHC Quick QuotePAHC - Free Report) and BioLife Solutions (BLFS Quick QuoteBLFS - Free Report) are countering industry pressures through differentiated innovation pipelines, operational efficiencies and focused execution in their respective growth franchises.

Industry Description

The industry includes companies that provide medical products and cutting-edge technologies for healthcare services. These companies are primarily focused on research and development and cater to vital therapeutic areas like cardiovascular, nephrology and urology devices.

The increase in procedure volumes is driving sales, particularly for surgical products and services. At the same time, cost-cutting measures are helping companies improve their bottom-line performance.

However, the industry’s profitability picture is under significant strain. Tariff-related expenses are cutting into margins, forcing companies into complex and costly supply-chain restructuring. Persistent component shortages, though less widespread than in prior years, continue to create inefficiencies and constrain output in certain product lines.

Major Trends Shaping the Future of the Medical Products Industry

AI and Digital Health Integration: AI has rapidly transitioned from narrow diagnostic augmentation to broad, workflow-integrated solutions. Per FDA list, currently there are more than 1350 FDA-cleared AI/ML-enabled devices, which is likley to increase as several medical device-makers are actively developing such devices for efficient and faster diagnosis and treatment. Moreover, remote patient monitoring platforms are projected to reach $57 billion by 2030 per a Markets and Markets report.

The digital health services are driving margin expansion, recurring revenue models and ecosystem consolidation. These technologies enable earlier intervention, support value-based care, and fundamentally shift profit pools from hardware to data-driven services, reflecting a deep convergence of clinical and software innovation.

Migration to Ambulatory and Home-Based Care: The U.S. market is experiencing a sustained shift from inpatient hospital settings to ASCs and home-based monitoring. ASC market is set to reach $205 billion by 2030, per a Grand View Research report, driven by procedure cost efficiency, CMS policy changes and expanded device portfolios tailored for outpatient use. Coupled with increased adoption of wearables and connected devices, care decentralization is reshaping technology requirements, pricing structures, and competitive dynamics for device makers.

Accelerating Innovation in Robotics and Specialty Therapeutics: Surgical robotics and specialty cardiovascular interventions are driving the next wave of value creation, with robotics poised for 10.5% CAGR, per a Grand View Research report, and pulsed-field ablation transforming electrophysiology standards.

Intuitive Surgical’s platform evolution, entry of versatile competitors and expansion of structural heart solutions (TMVR, PFA) highlight a winner-take-most dynamic — innovation, outcome evidence, and ecosystem lock-in are creating durable profit and ROIC advantages, while commoditized hardware businesses are under pressure.

Regulatory and Value-Based Care Transformation: The regulatory environment is evolving, with initiatives like the TCET pathway and bundled payment models rapidly aligning reimbursement and approval processes with evidence-based, value-centric purchasing.This results in faster market access for breakthrough devices and increased pricing pressure on mature categories. Success depends on manufacturers’ ability to demonstrate clinical differentiation, deliver outcome gains, and participate in risk-sharing arrangements — those that fail to adapt will face margin compression and potential disintermediation.

Zacks Industry Rank

The Zacks Medical Products industry falls within the broader Zacks Medical sector.

It currently carries a Zacks Industry Rank #157, which places it in the bottom 36% of more than 240 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Before we present a few medical product stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Performance

The industry has underperformed its own sector as well as the Zacks S&P 500 composite over the past year.

Stocks in this industry have collectively declined 13.2% against the Zacks Medical sector’s rise of 0.6%. The S&P 500 has increased 18.1% in the same time frame.

One-Year Price Performance

 

Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing medical stocks, the industry is currently trading at 19.9X compared with the S&P 500’s 23.2X and the sector’s 21.2X.

Over the past five years, the industry has traded as high as 27.4X and as low as 17.8X, with the median being at 21.9X, as the charts show.

Price-to-Earnings Forward Twelve Months (F12M)

Price-to-Earnings Forward Twelve Months (F12M)

4 Promising Medical Product Stocks

BioLife Solutions is emerging as a focused, higher-margin cell-processing pure play following a successful two-year strategic transformation. The third-quarter performance highlights robust demand recovery in biopreservation media, reflected in 33% year-over-year cell-processing growth and expanding EBITDA margins as operating leverage improves. The divestiture of the evo Cold Chain business has sharpened BLFS’ portfolio while strengthening liquidity, giving the company more than $125 million in cash to support disciplined M&A and product-line expansion.

Operational efficiency gains, seen in streamlined operations, rising direct-sales mix, and improved visibility from deep penetration into late-stage CGT programs, position BLFS for sustained recurring revenue growth. With BPM products embedded in 16 approved therapies and 30+ Phase III trials, the company enjoys exceptional demand durability. Management’s cross-sell strategy across CryoCase, CellSeal, HPL and CT5 offers meaningful revenue-per-patient upside. Overall, BLFS appears well-placed to benefit from expanding cell-therapy adoption, stronger commercial pipelines and strategic reinvestment capacity.

For this Bothell, WA-based company, the Zacks Consensus Estimate for 2026 revenues indicates year-over-year growth of 16.4%. The consensus estimate for earnings indicates growth of 38.1%. It delivered a trailing four-quarter earnings surprise of 229.17%, on average. Presently, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: BLFS

Boston Scientific is positioned for a strong 2026, driven by broad-based demand across its diversified product portfolio. Moreover, market leadership in several fast growing sectors, like Pulse Field Ablation and Left Atrial Appendage Closure, should accelerate top-line growth for the company. BSX has committed to drive more-than 10% growth over the next three years. The company also expects its weighted average market growth rate to increase to 9% over the next three years from approximately 8% in 2025.

The FDA approval for FARAPOINT PFA catheter and the ongoing limited market-release of SEISMIQ look promising. Meanwhile, the simplicity and safety profile of FARAPULSE may drive higher use in ASCs as more EP procedures move to this setting. Moreover, the company anticipates that data from the ongoing STANCE trial on its fast-growing AGENT drug-coated balloon will help expand the addressable market by three times within the percutaneous coronary interventions. Moreover, favorable reimbursement for concomitant procedures is likley to be a significant tailwind for the company, as it expects these procedures to grow from 25% to over 50% of WATCHMAN cases.

Operational efficiency remains a clear tailwind, with mix-driven gross-margin improvement, strong drop-through and disciplined cost management supporting 100 bps full-year operating-margin expansion despite a $100M tariff headwind in 2025. BSX is focusing on improving margins further by 150 bps over its current long-range plan, aided by a new ERP system and AI initiatives to drive automation and efficiency. Strategic M&A is further strengthening BSX’s long-term profile — the Elutia BioEnvelope acquisition enhances the CRM ecosystem, while the integration of the recent Relievant acquisition expands neuromodulation into chronic low-back pain.

For this Natick, MA-based company, the Zacks Consensus Estimate for 2026 revenues is pegged at $22.32 billion, projecting growth of 11.3%. The consensus mark for EPS is pinned at $3.45 per share, implying a 13.5% improvement year over year. The company delivered a trailing four-quarter average earnings surprise of 7.36%. Presently, the company carries a Zacks Rank #2 (Buy).

Price and Consensus: BSX

ResMed enters 2026 with a  strong momentum on the back of rising demand for its products and solutions for a broader range of respiratory disorders, especially CPAP therapy. The company recorded 11% top-line growth in second-quarter fiscal 2026. The earnings per share were up 16%. The company is likely to continue this momentum through the rest of the fiscal year on several macro tailwinds.

During its second-quarter earnings call, the company noted that rising adoption of GLP-1 drugs is acting as a significant "demand generator" for ResMed, contrary to initial market fears. Real-world data has demonstrated that patients receiving GLP-1 drugs are 10-11% more likley to start CPAP therapy for sleep disorder along with improved long-term adherence. The company’s use of AI to help patients adjust comfort settings on their devices is also expected to improve short-term and long-term therapy adherence.

Moreover, big-tech companies like Apple and Samsung are launching sleep apnea detection features on their smart wearables. This is expected to drive awareness among people therby driving them towards getting a proper treatment. This potential rise in health-aware consumers should drive demand further for ResMed’s sleep disorder devices. Moreover, exclusion of CPAP and bilevel therapies from the CMS competitive bidding program is likely to drive scale for ResMed's Home Medical Equipment (HME) partners.

Meanwhile, ResMed has doubled its manufacturing capabilities in the United States, thereby ensuring less than two-day delivery for the majority of its products. Moreover, manufacturing in the United States will help the company avoid U.S. tariffs, thereby driving margin improvements. The company delivered a 310 bps improvement in gross margin during the fiscal first quarter and is focusing on achieving further supply-chain efficiency over the next few years.

For this San Diego, CA-based company, the Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $5.58 billion, projecting 8.5% growth. The consensus mark for EPS is pinned at $10.98 per share, implying a 15% improvement year over year. The company delivered a trailing four-quarter average earnings surprise of 2.74%. Presently, the company carries a Zacks Rank #2.

Price and Consensus: RMD

For Phibro Animal Health Corporation, the outlook for 2026 is bolstered by a strong start to the fiscal year, successful large-scale integrations and a strategic expansion into new markets. The acquisition and seamless integration of the Zoetis Medicated Feed Additive (“MFA”) portfolio is likely to be the primary driver for 2026. The new MFA business contributed $80.5 million in sales in the first quarter of fiscal 2026, helping drive total MFA and other growth to 81%.

The company is seeing strong synergies between legacy products and the acquired portfolio, allowing it to design more comprehensive programs for customers. Furthermore, as the year progresses, PAHC expects to see favourable net price impacts from the Zoetis portfolio, which will help improve overall profitability. Moreover, lower feed and grain input prices are shifting producers’ focus on animal health products to prevent diseases.

Meanwhile, expansion into companion animal care with the launch of Restoris should drive the top line further. Meanwhile, emerging research suggests that while GLP-1 users may spend less on food overall, they are increasingly choosing high-quality, animal-derived proteins, thereby boosting PAHC’s long-term prospects.

Meanwhile, PAHC has launched the Phibro Forward income growth initiative, which is specifically designed to unlock revenue growth and cost savings. This initiative is already helping drive EBITDA and margin growth for fiscal 2026. Moreover, strong vaccine sales on the back of strong international demand, especially poultry products in Latin America, look promising. The strong growth of high-margin Vaccines and Nutiritional Speciallities is also driving margin improvement. As a result of these efficiencies and strong performance, the company has raised its full-year adjusted EBITDA and net income guidance for fiscal 2026.

For this Teaneck, NJ-based company, the Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $1.47 billion, projecting 13.1% growth. The consensus mark for EPS is pinned at $2.76, implying a 32.1% improvement year over year. The company delivered a trailing four-quarter average earnings surprise of 20.77%. Presently, it carries a Zacks Rank of 2.

Price and Consensus: PAHC