Chicago, IL – January 6, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Doximity DOCS, BrightSpring Health Services, Inc. BTSG and Embecta Corp. EMBC
The Medical Services sector is experiencing significant transformation fueled by advancements in technology, increased adoption of value-based care and heightened focus on patient-centric solutions. Growing demand for remote treatment has led to a tremendous upsurge in digital healthcare options over the past few years.
Demand for digital healthcare treatment continues to grow in the form of telemedicine-focused online medical and AI-powered technology services backed by the adoption of data and analytics. Hospitals and healthcare providers are leveraging these tools to streamline operations and improve diagnostic and treatment accuracy. Furthermore, value-based care models, which emphasize patient outcomes over service volumes, are gaining traction globally, encouraging providers to adopt preventive care measures and personalized treatment strategies.
According to a recent Grand View Research report, the global healthcare analytics market was valued at $43.1 billion in 2023 and is expected to witness a CAGR of 21.1% from 2024 to 2030. Primary stakeholders — payers, healthcare professionals and patients — will benefit from all-new insights, services and levels of experience that next-generation healthcare-related data and analytical capabilities provide. Stocks like Doximity, BrightSpring Health Services, Inc. and Embecta Corp. are expected to gain the most from the rapidly transforming healthcare services landscape.
Further, as the world grapples with aging populations, chronic disease prevalence, and healthcare delivery complexities, the demand for skilled nursing professionals has reached unprecedented levels. In 2025, this trend is expected to continue, further shaping the landscape of the service industry within healthcare. However, in the post-pandemic era, manual workforce shortage within healthcare has become a worldwide problem, weighing heavily on healthcare infrastructure.
According to a 2024 report by Mercer, there will be a deficit of more than 100,000 healthcare workers in the United States by 2028. Within this, nursing assistants will have the biggest projected deficit compared to other healthcare occupations, signaling the need to improve talent attraction and retention strategies for this segment. By 2028, Mercer expects a projected deficit of over 73,000 nursing assistants nationwide. This has led to increased labor cost and health expenses.
The Zacks Medical Services industry comprises third-party service providers and caregivers appointed by core healthcare companies for economies of scale. The industry includes pharmacy benefit managers, contract research organizations, wireless MedTech companies, third-party testing labs, surgical facility providers and healthcare workforce solution providers, among others.
Over the years, this industry has strategically moved from volume- to value-based care. The resurgence in medical tourism is further boosting the sector. This changing pattern of care calls for advanced facilities, thus increasing the need to appoint specialized external service providers. With the growing importance of effective healthcare management, the medical service industry has become an integral part of the modern healthcare system.
Digital Revolution: The adoption of digital platforms within the medical device space is gaining prominence in the United States. A 2024 digital health market report by Statista suggests that this market will witness a 9.2% CAGR from 2024 to 2028. The increasing availability of unstructured health data, advanced analytics, and the demand for personalized medical services underscores the growing importance of big data in healthcare.
According to a Roots Analysis report, the global big data in healthcare market size is estimated to grow from $78 billion in 2024 to $540 billion by 2035, representing a CAGR of 19.20%. Other reports suggest that companies that adopted artificial intelligence technologies witnessed a 50% reduction in treatment costs and experienced more than 50% improvement in patient outcomes.
Revival in the Nursing Care Market: In 2025, the role of nurses continues to evolve with advancements in medical technologies and shifts in healthcare delivery models. Telehealth and remote patient monitoring have expanded nurses' reach beyond traditional hospital settings, enabling them to provide care in rural or underserved areas. Specialized nursing roles, such as nurse practitioners, critical care specialists and geriatric nurses, are in high demand due to the growing complexity of patient needs.
Going by the Bureau of Labor Statistics, the overall employment of nurse anesthetists, nurse midwives and nurse practitioners is projected to grow 40% from 2023 to 2033, much faster than the average for all occupations. About 31,900 openings for nurse anesthetists, nurse midwives, and nurse practitioners are projected each year, on average, over the decade.
Staffing Shortage: Despite the end of the healthcare emergency (WHO declared the end of COVID-19 as a global health emergency on May 5), the trauma of the past few years' uncertainty and commotion has forced frontline workers like doctors and medical staff to leave the field. Added to this, a drastic increase in the aging population in recent times (about 10,000 individuals aged 59-77 are joining Medicare plans daily) has made the healthcare staffing shortage more pronounced.
In the article "A Public Health Crisis: Staffing Shortages in Health Care," published in Favorite Healthcare Staffing, WHO predicts a shortfall of 15 million healthcare workers worldwide in 2030. Needless to say, this supply shortage has led to a significant rise in healthcare wages. Going by a HR for Health report, increased labor costs and staffing challenges have led to a rise in hospital expenses. Hospitals have experienced a 15.6% increase in labor expenses per adjusted discharge compared to pre-pandemic levels.
The Zacks Medical Services industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #140, which places it in the bottom 44% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates gloomy near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
We will present a few stocks that have the potential to outperform the market based on a strong earnings outlook. But it's worth taking a look at the industry's shareholder returns and current valuation first.
The Medical Services Industry has underperformed its sector and the S&P 500 over the past year. The stocks in this industry have collectively lost 13.7% during the said time frame compared with the Medical sector's 6.2% dip and the S&P 500 composite's surge of 25.3%.
On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing medical stocks, the industry is currently trading at 14.79X compared with the S&P 500's 25.08X and the sector's 25.47X.
Over the last five years, the industry has traded as high as 21.09X, as low as 11.83X, and at the median of 15.54X.
Below, we present three stocks from the Medical Services industry that have been witnessing positive earnings estimate revisions and carry a Zacks Rank #1 (Strong Buy) at present.
You can see the complete list of today's Zacks #1 Rank stocks here.
Doximity: It is a digital platform for U.S. medical professionals. The company's network members include over 80% of U.S. physicians across all specialties and practice areas. Doximity provides its verified clinical membership with digital tools built for medicine, enabling them to collaborate with colleagues, stay up to date with the latest medical news and research, manage their careers and on-call schedules and conduct virtual patient visits.
This Zacks Rank #1 stock's fiscal 2026 expected earnings growth rate is pegged at 9.9%. The Zacks Consensus Estimate for DOCS' fiscal 2026 revenues indicates a rise of 10.1% over fiscal 2025.
BrightSpring: The company provides complementary and integrated home- and community-based pharmacy and health solutions for complex populations in need of specialized and/or chronic care. Through BTSG's service lines, including pharmacy, home health care and primary care, and rehabilitation and behavioral health, the company provides comprehensive care and clinical solutions in all 50 states to over 400,000 customers, clients and patients daily.
BrightSpring's 2025 earnings growth rate is pegged at 58.1%. The Zacks Consensus Estimate for BTSG's 2025 revenues indicates a rise of 10.9% over 2024. The stock sports a Zacks Rank #1 currently.
Embecta: It is a medical device company that focuses on the provision of various solutions to enhance the health and wellbeing of people living with diabetes. Its products include pen needles, syringes, and safety injection devices, as well as digital applications to assist people with managing patient's diabetes.
EMBC's fiscal 2026 expected earnings growth rate is pegged at 9.2%. The Zacks Consensus Estimate for Embecta's fiscal 2026 revenues indicates a rise of 1.9% over fiscal 2025. The stock carries a Zacks Rank #1 at present.
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