Summary of MedTech Industry Outlook for 2026 Industry Overview - The MedTech industry is experiencing increased stock-specific volatility and performance dispersion, which is expected to continue into 2026 [1][3][20] - Major product cycles and a supportive hospital spending environment, combined with trough valuations compared to the S&P, create a favorable setup for the industry [1][3] Key Insights - **Growth Projections**: Organic growth is estimated at +6-7% driven by innovation cycles in large markets such as concomitant PFA/LAA, RDN, TMTT, leadless pacing, and diabetes devices [3][8] - **Margin Improvement**: Margins are expected to improve due to a favorable mix shift and normalized cost/pricing dynamics [3][8] - **Hospital Spending**: Capital spending in hospitals is projected to grow by +4.1% in 2026, consistent with the previous year's growth of +4.0% [4][62] - **Reimbursement Challenges**: 34% of hospital executives cited reimbursement pressure as the biggest challenge for the upcoming year, an increase from 25% the previous year [3][70] Market Dynamics - **Volatility and Stock Picking**: The high degree of volatility, particularly around earnings, has made stock picking challenging and is likely to persist into 2026 [3][9] - **Investment Sentiment**: Despite macroeconomic uncertainties, hospitals are still inclined to invest in new equipment, with over 70% considering purchases across various categories [66][69] Competitive Landscape - **Robotic Systems**: There is a notable emphasis on robotic systems in capital budgets, with companies like ISRG and SYK gaining market share in soft-tissue and orthopedic robotics, respectively [9][10] - **Emerging Technologies**: New growth verticals such as Renal Denervation and next-gen Neuromodulation are expected to contribute to future growth [38] Analyst Ratings and Recommendations - **Upgrades**: Companies like DexCom (DXCM) and Bausch + Lomb (BLCO) have been upgraded to Overweight due to strong pipelines and operational improvements [10][11] - **Cautions**: Inspire Medical Systems (INSP) has been downgraded to Equal-weight due to slowing growth and increased competition [12][14] Conclusion - The MedTech industry is positioned for growth in 2026, supported by favorable hospital spending trends and innovation in product offerings. However, challenges such as reimbursement pressures and market volatility remain significant factors to monitor [3][10][75]