The Zacks Medical – Products industry has entered the latter half of 2026 with a fundamentally constructive demand backdrop, despite persistent cost and execution pressures. Across the industry, recurring themes include resilient healthcare utilization, healthy hospital capital spending, stable procedure volumes and continued demand for products addressing aging-related and chronic conditions. Innovation is emerging as an increasingly important growth lever, with manufacturers expanding AI-enabled workflows, robotics, next-generation diagnostics and digitally connected products.

Tariff exposure, higher manufacturing and component costs, supply disruptions and selected product-specific issues are limiting margin expansion and creating uneven performance across categories.

Demand is proving more resilient than macroeconomic headwinds, although earnings performance increasingly depends on pricing, productivity gains and portfolio mix. Consequently, the industry appears poised for moderate growth, with technology-intensive and well-executed business segments likely to outperform.

As 2026 entered its final quarter, ICU Medical (ICUI Quick QuoteICUI - Free Report) ,Neogen (NEOG Quick QuoteNEOG - Free Report) and Trulieve Cannabis Corp. (TRLV Quick QuoteTRLV - Free Report) offer distinct growth narratives, ranging from improving cannabis demand and regulatory tailwinds to stronger commercial execution, infusion-system momentum and expanding medical-device opportunities.

Industry Description

The industry includes companies that provide medical products and cutting-edge technologies for healthcare services, including Abbott Laboratories, Stryker and Boston Scientific. 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. War-related disruptions are likely to cut into margins and may force companies into another complex and costly supply-chain restructuring.

Major Trends Shaping the Future of the Medical Products Industry

Innovation Continues to Create New Growth Engines: The industry's strongest growth driver remains continuous product innovation. Companies are accelerating investments in AI-powered imaging, robotic-assisted surgery, electrophysiology, structural heart therapies, diabetes care and digital health platforms to capture expanding clinical opportunities. Per the FDA list, there are currently more than 1,600 FDA-cleared AI/ML-enabled devices, and the figure is likely to increase as several medical device makers are actively developing such devices for efficient and faster diagnosis and treatment. Remote patient monitoring platforms are projected to reach $36.29 billion by 2026-end and $66.33 billion by 2031, per a Markets and Markets report.

New product launches, broader regulatory approvals and increasing physician adoption are helping companies penetrate higher-growth therapeutic categories while improving procedural efficiency and patient outcomes. Robust innovation pipelines are also supporting pricing power and strengthening long-term competitive positioning across the medical products landscape.

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. The 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.

AI, Robotics and Product Innovation Are Expanding Growth Pools: Innovation is increasingly shifting from incremental product upgrades to integrated ecosystems combining devices, software, data and AI. Robotics remains a major opportunity as procedure penetration is still relatively low, while AI-enabled imaging, navigation, monitoring and workflow solutions are improving clinical productivity and creating recurring or higher-value revenue streams.

New product launches and expanding indications are also helping manufacturers capture share and enter adjacent markets. This supports both revenue growth and margin potential, although commercialization and regulatory timelines can delay the financial payoff.

According to a Grand View Research report, the healthcare AI market is projected to witness a CAGR of 38.9% over the next seven years, surpassing $500 billion by 2033. Meanwhile, the medical robotics market is expected to expand at a CAGR of 15.1%, per a Markets and Markets report.

Procedure Volumes, Aging and Hospital CapEx Support Durable Demand: An aging population, rising chronic-disease prevalence and ongoing demand for high-acuity care are sustaining procedure volumes across cardiovascular, orthopedic, surgical and diagnostic categories. Hospital capital spending also remains relatively resilient, with elevated order backlogs supporting demand for advanced equipment and technology.

The continued adoption of minimally invasive procedures and robotic-assisted surgery further increases equipment utilization and consumables demand. However, discretionary procedures and certain international markets remain more exposed to economic uncertainty and regional softness, creating pockets of uneven growth.

Tariffs, Inflation and Supply-Chain Friction Remain Key Earnings Risks: Cost pressures remain the industry's clearest negative catalyst. Tariffs, higher prices for memory chips, metals, oil, freight and manufacturing inputs are weighing on gross margins. Supply constraints and product remediation can delay shipments and create backlogs.

Companies are responding through pricing, sourcing changes, productivity programs and restructuring, but recovery is not uniform. Persistent inflation or new trade measures outpace mitigation efforts, leaving revenue growth intact but limiting operating leverage and EPS expansion.

Zacks Industry Rank

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

It currently carries a Zacks Industry Rank #98, which places it in the top 40% out of 247 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates dull 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 28.9% against the Zacks Medical sector’s growth of 5.9%. The S&P 500 has increased 21.3% 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 15.74X compared with the S&P 500’s 19.96X and the sector’s 20.73X.

Over the past five years, the industry has traded as high as 27.21X and as low as 15.38X, with the median being 21.76X, as the charts show.

Price-to-Earnings Forward Twelve Months (F12M)

Price-to-Earnings Forward Twelve Months (F12M)

3 Stocks to Buy Amid Industry Tailwinds

ICU Medical should reflect solid momentum in its core infusion franchises in the last quarter of 2026. Consumables are expected to deliver mid-single-digit growth, while IV Systems remains the stronger catalyst after 12% organic growth in the second quarter and record pump sales. Competitive wins, installed-base upgrades and greater software and service penetration provide additional runway. Management also expects year-over-year earnings comparisons to improve as tariff and JV deconsolidation effects largely fade. The key risks include declining OEM revenues, currency pressure and some installations pulled forward into earlier periods.

For this San Clemente, CA-based company, the Zacks Consensus Estimate for 2026 revenues is pegged at $2.2 billion, suggesting a decline of 0.7%. However, the consensus mark for earnings per share (EPS) is pinned at $8.77, indicating a gain of 13%. The company delivered a trailing four-quarter average earnings surprise of 20.07%. Presently, the company carries a Zacks Rank #2 (Buy). It has a VGM score of B. The company also has a VGM Score of B. Stocks with a VGM Score of A or B and a Zacks Rank of #1 (Strong Buy) or #2, has the highest probability of success. You can see the complete list of today’s Zacks #1 Rank stocks here.

Price and Consensus: ICUI

Neogen should benefit from improving commercial execution and recovery in both Food and Animal Safety during the final quarter of 2026. Food Safety delivered 8.1% core growth, led by Petrifilm and indicator testing, while Animal Safety grew 8%, aided by veterinary instruments and biosecurity products. Evolving food-safety regulations could support testing demand even without stronger food production. Hinalea’s hyperspectral-imaging collaboration also broadens Neogen’s innovation pipeline. Management noted that customer-order timing boosted first-quarter growth, while inflationary pressure on food producers and elevated farm input costs may put pressure on demand.

For this Lansing, MI-based company, the Zacks Consensus Estimate for fiscal 2027 revenues is pegged at $883.2 million, projecting 1.5% growth. The consensus mark for EPS is pinned at 31 cents, implying a 3.1% decline year over year. The company delivered a trailing four-quarter average earnings surprise of 76.97%. Presently, it carries a Zacks Rank #2. It has a VGM score of A.

Price and Consensus: NEOG

Trulieve’s final quarter of 2026 has several identifiable growth catalysts. Management expects Georgia and Pennsylvania to offset seasonal pressure in Florida and sees growth accelerating into year-end. Georgia’s pharmacy channel is expanding, while Texas could become a major new medical market once licensing is finalized. The company also expects federal cannabis reform, potential SAFE Banking and 280E changes to improve access and reduce operating friction. Florida’s seasonal softness, weaker average baskets and regulatory uncertainty around broader rescheduling and pending policy changes may hurt prospects.

For this Hallandale Beach, FL-based company, the Zacks Consensus Estimate for 2026 revenues is pegged at $1.01 billion, projecting a 14.8% decline. The consensus mark for loss is pinned at $1.84 per share. The company delivered an earnings surprise of 83.33% in its first and only reported quarter since listing on the NYSE in June 2026. Presently, it carries a Zacks Rank of 2. It has a VGM score of B.

Price and Consensus: TRLV