3 Medical Instruments Industry Stocks to Buy on genAI and M&A Boost

Industry Overview - The Medical Instruments industry is undergoing a transformative phase driven by the adoption of generative Artificial Intelligence (genAI) and digital therapeutics, with significant growth expected in the healthcare sector [1][4] - The industry is highly fragmented, involving extensive research and development across various therapeutic areas, and has seen a resurgence in innovation following the pandemic [3] Trends Impacting the Industry - Digital Revolution: The adoption of genAI is increasing, focusing on "hyper personalization" in treatment options and operational management, with the global digital health market projected to grow from $262.63 billion in 2022 to approximately $939.54 billion by 2032, at a CAGR of 13.1% [4] - M&A Activity: The industry is benefiting from a trend of mergers and acquisitions, with 122 deals worth $21.1 billion announced in Q2 2024, marking a 275% increase in value compared to the previous year [5] - Economic Growth Projections: The IMF projects economic growth of 3.2% in 2024, with concerns about geopolitical shocks and commodity price spikes affecting the industry [6][7] Performance Metrics - The Zacks Medical Instruments industry holds a Zacks Industry Rank of 63, placing it in the top 25% of over 250 Zacks industries, indicating positive near-term prospects [8] - Over the past year, the industry has risen by 15.5%, outperforming the broader sector's 10% increase but underperforming the S&P 500's 22.6% surge [9] Valuation Insights - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 33.52X, higher than the broader industry's 23.48X and the S&P 500's 21.19X [10] Company Highlights - Intuitive Surgical: Expected to achieve 2024 sales of $8.1 billion, a 13.7% increase from 2023, with an EPS estimate of $6.67, reflecting a 16.8% improvement [12] - Masimo: Projected 2024 sales of $2.1 billion, a 2.4% rise, with an EPS estimate of $3.87, indicating a 2.1% increase [13] - Veracyte: Anticipated 2024 sales of $437 million, a 21% increase, with an EPS estimate of 14 cents per share, representing a 113.7% jump [15]