In recent years, the medical instrument industry, part of the wider
Medical sector, has seen a transformation in the nature of its business, leading to higher research and development activities for developing cutting-edge technologies. The industry’s landscape changed further with the onset of the COVID-19 crisis that put robotic and remote services in the limelight. Although the majority of economies have opened up following strict lockdowns in the past couple of years, the demand for robotic and remote services is likely to remain.
However, the industry is currently facing several challenges, including supply-chain challenges, a shortage of semiconductor chips and global inflationary pressure. These developments have resulted in an extremely tough situation related to raw material and labor costs as well as freight charges. The shortage of semiconductor chips has resulted in a delay in the production of commercialized products.
Although the industry faced headwinds, a few medical instrument companies were able to maintain their recovery trend in the first nine months of 2022. Moreover, the ongoing macro headwinds are likely to improve in 2023, which should help top-line and bottom-line growth.
Here we discuss three medical instruments stocks —
ShockWave Medical ( SWAV Quick Quote SWAV - Free Report) , iRadimed ( IRMD Quick Quote IRMD - Free Report) and Tactile Systems Technology ( TCMD Quick Quote TCMD - Free Report) — which are likely to outperform the industry going forward amid an improving world economy and easing macro headwinds. These stocks carry a Zacks Rank #2 (Buy) each. These stocks also have a Momentum Score of A or B, which indicates that these would be good stocks for momentum investors based on recent price changes and earnings estimate revisions. Meanwhile, the underperformance of iRadimed and Tactile Systems in the past six months compared with the Zacks Medical – Instruments industry may lead to a rally in these stocks on the back of strong fundamentals. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Image Source: Zacks Investment Research ShockWave Medical
ShockWave Medical has a Momentum Score of B. The Zacks Consensus Estimate for earnings has moved 12.1% and 4.1% north for 2022 and 2023, respectively, in the past 60 days.
The increased adoption of coronary IVL in the United States, continued sales force expansion, growing international expansion and higher adoption of Shockwave products are likely to boost the company’s performance. The company’s strong global growth highlights the significant clinical need for a better calcium treatment and how well the team at ShockWave Medical is addressing the same with IVL.
iRadimed has a Momentum Score of B. The Zacks Consensus Estimate for earnings has improved 2.9% for 2022 in the past 60 days. The consensus estimate for 2023 earnings stands at $1.20 per share, implying year-over-year growth of 13.2%.
iRadimed is a leader in the development of innovative magnetic resonance imaging ("MRI") medical devices and the only known provider of a non-magnetic intravenous ("IV") infusion pump system and non-magnetic patient vital signs monitoring systems designed for use during MRI procedures. During the third quarter, the company reported 23% growth in revenues and 35% in earnings from the year-ago period. The company stated that significant demand for its IV pump and patient monitor product lines continued during the third quarter. The company has a strong bookings growth that continued to add to its extensive backlog and is likely to drive revenues for the remainder of 2022 and 2023.
Tactile Systems has a Momentum Score of A. The Zacks Consensus Estimate for loss has narrowed 12.6% for 2022. The consensus estimates for 2023 loss stood at 10 cents, implying a year-over-year improvement of 87.3%.
The medical technology company develops medical devices for the treatment of chronic diseases at home. During the third quarter, it reported 24% growth in revenues and loss narrowed 35.3% year over year. Strong demand for its products during the quarter led the company to raise its revenue guidance by approximately 1.5% as measured at the midpoint of the guided ranges. Meanwhile, its settlement of a pending securities class action lawsuit earlier this month removed an overhang.