The year 2024 has been quite tumultuous for investors keen to invest their money in health technology companies. The year has seen AI-driven diagnostics and robotic-assisted surgeries being the two primary areas to lead the charge. Yet, despite the relentless spree of innovations in digital health, artificial intelligence (AI) and personalized medicine, the year also made the sector battle through significant healthcare labor shortages as well as supply challenges stemming from worldwide geopolitical issues.
However, as the calendar flips to 2025, there are a few favorable takeaways that investors can look forward to. Market watchers are widely optimistic about the sector poised to benefit from global trend improvements, favorable monetary policies and continued technological advancements. As we discuss more about these, it will be prudent to invest in health technology innovator stocks for a stable portfolio in 2025. Four such stocks with a favorable Zacks Rank are Veracyte VCYT, Omnicell OMCL, Masimo Corporation MASI and Abbott Laboratories ABT.
Disruptive Trends of 2024
Through 2024, conflicts in Russia and Ukraine, Israel, Palestine and surrounding areas, tensions between the United States and China, along with potential energy shortages in Europe, and increased energy and transportation costs have significantly impacted the profitability of the health technology innovators. This apart, massive clinical staffing shortages dented the sector’s revenues significantly.
And despite the health technology sector standing at the forefront of a transformative era, the industry players were also seen restricting their R&D activity in 2024, hurt by the high rate of innovation-bound borrowings. These apart, high interest rates were also responsible for reducing the aggregate demand of end users, leading to demand-supply disequilibrium and price drop.
2025 to Beat the Odds for Health Technology
Good news for the investors, as the dawn of 2025 arrives, the market is regaining its optimism, thanks to the Fed’s two successive rate cuts and assurance of a further easing of monetary policy. The latest rate cuts should help improve the borrowing scenario in health technology’s most attractive markets like cardiovascular, oncology, endoscopy, urology, neuromodulation and Diabetes management by speeding up and scaling up research and development works. The rate cut might also improve the sector’s shrinking margin scenario over the near term.
The International Monetary Fund’s (IMF) October 2024 World Economic Outlook also came as a sense of respite for investors. The report projects a global decline in inflation in 2025. After peaking at 9.4% year over year in the third quarter of 2022, headline inflation rates are now projected to reach 3.5% by the end of 2025, below the average level of 3.6% between 2000 and 2019. This might lead to an improvement in the healthcare and discretionary consumption pattern within the sector.
Last but not the least, if we look at the Centers for Medicare & Medicaid Services’ (CMS) national health expenditure projections, 2025 may yield higher returns for health technology investors compared to 2024. Per its June 2024 report, CMS projects that over 2023-2032, average annual growth in National Health Expenditures (NHE) (5.6%) will outpace average annual growth in GDP (4.3%), resulting in an increase in the health spending share of GDP from 17.3% in 2022 to 19.7% in 2032. This planned annualized increase in health spending is expected to make healthcare more affordable and accessible for the common people, driving demand for healthcare services and goods and increasing healthcare consumption.
Focus Areas Within Health Technology
As we look toward 2025, with increasing regulatory support, health technology stocks are expected to thrive. key innovators in the sector are well-positioned for significant growth, driven by technological breakthroughs and increasing global demand for efficient healthcare solutions.
Many companies are leveraging AI to enhance precision, reduce costs, and improve patient outcomes. Further, there has been a growing adoption of telemedicine platforms, highlighting opportunities for healthcare IT stocks. Wearable health devices and remote monitoring tools remain key trends. Additionally, biotech firms incorporating AI for drug discovery and personalized therapies are attracting substantial investment, reflecting optimism in their potential for high returns.
4 Health Technology Inventors to Buy Right Now
Veracyte: Veracyte continues with a robust display of strength in the testing business using its established diagnostic platform. Its comprehensive Afirma solution’s differentiation is leading to market share gains. The Decipher Prostrate test is also making strides, achieving a ‘Level 1B’ designation in the updated NCCN guidelines. Veracyte’s strategic R&D investment as part of its long-term growth strategies is paying off.
The Zacks Consensus Estimate for Veracyte’s 2025 sales is pegged at $487.5 million, indicating a 9.8% rise from 2024. The consensus estimate for VCYT’s adjusted earnings is pegged at 63 cents per share, a 65.8% projected jump from 2024. Veracyte currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Veracyte, Inc. Price
Veracyte, Inc. Price
Veracyte, Inc. price | Veracyte, Inc. Quote
Omnicell: This end-to-end automation solutions provider for the medication-use process is positioning itself for strong growth in 2025 by addressing healthcare challenges with enhanced medication management solutions. The introduction of the XT Amplify program is advancing the company’s goal of delivering outcome-centric innovations. Such efforts are bringing Omnicell closer to achieving the industry vision of the autonomous pharmacy. Omnicell's restructuring and cost-saving measures are also likely to drive major operational improvements.
The Zacks Consensus Estimate for this Zacks Rank #1 stock’s 2025 sales is pegged at $1.14 billion, indicating a 3.3% rise from 2024. The consensus estimate for OMCL’s adjusted earnings is pegged at $1.78 per share, a 5.9% projected jump from 2024.
Omnicell, Inc. Price
Omnicell, Inc. Price
Omnicell, Inc. price | Omnicell, Inc. Quote
Masimo: The company’s focus on patient monitoring and ongoing research and product development efforts are impressive. A solid product suite is likely to aid Masimo in solidifying its business globally, as evidenced by its various tie-ups with healthcare providers. A strong liquidity position is an added plus.
The Zacks Consensus Estimate for this Zacks Rank #1 stock’s 2025 sales is pegged at $2.22 billion, indicating a 6.2% rise from 2024. The consensus estimate for MASI’s adjusted earnings is pegged at $4.50 per share, an 11.8% projected jump from 2024.
Abbott: Abbott’s pipeline is generating new growth prospects to help sustain the positive momentum in 2025. Alinity, the company’s next-generation suite of systems, is a key driver in the core lab diagnostics business. The company is optimistic about its latest progress with biosimilars and expects this to significantly boost Established Pharmaceuticals Division sales, beginning 2025. Freestyle Libre continuous glucose monitoring device is also on a great trajectory.
The Zacks Consensus Estimate for this Zacks Rank #2 (Buy) stock’s 2025 sales is pegged at $44.94 billion, indicating a 7% rise from 2024. The consensus estimate for ABT’s adjusted earnings is pegged at $5.14 per share, a 10% projected jump from 2024.
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