雅虎香港財經 The 3 Best MedTech Stocks to Watch in May 2023
Finding the best MedTech stocks to watch in May can be a challenge. After all, the category is huge. MedTech encompasses many types of sectors like medical devices, cloud applications, artificial intelligence (AI), and diagnostic systems.
Yet there are many positive catalysts for the industry. Just look at AI. A recent study from JAMA Internal Medicine highlights how innovation is improving healthcare. It compared human doctor advice to that of ChatGPT. The results? Well, based on a peer review process, ChatGPT scored much higher on quality and empathy. True, the study is still preliminary and there will need to be much more research. But this does show the potential of technologies like AI.
There are many ways MedTech can help improve healthcare. Just some include fewer errors, more efficiency, and lower hospitalization rates. One study estimates that the benefits could come to about $15 trillion – on a global basis – by 2023.
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So what are the three of the best MedTech stocks to watch in May? Let’s take a look:
Teladoc Health (TDOC)
Source: Oleg Ivanov IL / Shutterstock.com
The shares of Teladoc (NYSE:TDOC) – an operator of a virtual care platform – has been on a roller coaster. In late 2019, the stock price traded at about $80. But as the pandemic emerged, there was a major bull run. The shares would hit over $260 by early 2021. But this would be followed up by a grueling drop in the price. They currently trade at $26. It’s actually not far from the $19 IPO price in 2015.
But this looks like an attractive investment opportunity. TDOC stock does appear to be poised to be a top MedTech stock to buy in May. The digital platform is massive. Last year, there were over 18.5 million medical visits.
The main services include primary care, mental health, condition management, and specialty & wellness care. The company also has more than 300 health plan customers, such as UnitedHealth Group (NYSE:UNH), Aetna, and Centene (NYSE:CNC).
In the latest quarter, Teladoc announced an 11% increase in sales to $629 million. While the company posted a loss, there was an improvement in the adjusted gross margin from 66.9% to 69.8%.
Recently, Teladoc announced that it will provide weight management services that will include prescriptions. Drugs like Ozempic, Wegovy, and Eli Lilly’s (NYSE:LLY) Mounjaro have shown the effectiveness of these treatments. In other words, this could help to boost the growth path for Teladoc.
iRhythm Technologies (IRTC)
Source: iStockphoto
Deep learning is a form of artificial intelligence. It uses neural networks – which mimic the brain – to process enormous amounts of information to gain insights and learn.
Despite the benefits, the technology can be challenging for regulated industries. It can often be a “black box,” which means it is difficult to understand how the technology comes up with its output.
But for iRhythm Technologies (NASDAQ:IRTC), the company has been able to leverage deep learning for its heart monitors and received FDA clearance for them. This allows for analysis – such as for heart irregularities — that is at the levels of expert cardiologists. Over the years, the company has accumulated a massive data set of ECG data, at about 1.5 billion hours for its sophisticated models.
iRhythm Technologies has been able to turn this technology into a thriving business. In the most recent quarterly report, the company announced a 20.6% increase in revenues to $111.4 million and a 100 basis improvement in gross margins to 67.9%, on year-over-year basis.
But iRhythm Technologies is not just a good MedTech stock opportunity in May. It definitely has lots of long-term potential. According to the company, the goal is to reach $1 billion in revenues by 2027.
Veeva Systems (VEEV)
Source: Blackboard / Shutterstock
Even though cloud computing has been around for over 20 years, the industry continues to grow. The technology allows for lower costs, better analytics, and seamless upgrades.
But there are some issues like security and data privacy. This is especially the case for regulated industries like healthcare.
Yet for Veeva Systems (NYSE:VEEV), this is a massive opportunity. The company has built a highly secure platform that is geared to the unique requirements for healthcare companies. It has ten major product areas, which include more than 30 offerings. Just some of them include clinical data management, CRM (customer relationship management), collaboration, content management, and analytics. As a testament to the power of this technology, Veeva has recently signed a ten-year strategic partnership with Merck (NYSE:MRK).
In the fourth quarter, the company reported revenues of $563.4 million, up 16% and net income came to $188.5 compared to $97.1 million in the same period a year ago. The company is also a cash machine. In the past year, it generated $780.5 million in free cash flows.
Unlike many other tech companies, Veeva has not laid off any employees. But this should not be a surprise. Since the company’s founding in 2007, it has been a lean organization. Then again, it has a focus on stability – regardless of the environment. It’s the kind of thing that makes it a good MedTech stock pick for May.
On the date of publication, Tom Taulli did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.
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