By Doug Busch
After enduring a prolonged stretch of underperformance, medical device stocks are beginning to show early signs of stabilization as investors rotate back toward defensive growth areas of the healthcare sector.
Improving technical setups are now raising the possibility that a broader recovery may be starting to take shape across several beaten-down medical device names.
Looking through the lens of the iShares Medical Devices ETF, the fund is trading 25% below its 52-week high. It has lagged behind the broader healthcare sector on the ratio chart versus the State Street Health Care Select Sector SPDR ETF since last October, highlighting the group's prolonged period of relative weakness.
Technically, however, some early signs of stabilization are beginning to emerge. The medical devices ETF displayed mild bullish RSI divergence throughout 2026, moving sideways below the oversold 30 level even as its price continued declining.
A double top near $65 followed by a bearish death cross in mid-February accelerated the selloff, but recent candlestick activity, including a doji on May 7 and a bullish harami Tuesday, suggests selling pressure may finally be starting to ease. The fund was trading around $48 Wednesday.
As the sector begins to stabilize, let's take a closer look at two medical device names that appear poised for higher prices in Smith & Nephew and Glaukos.
Smith & Nephew, an English medical device player, is up 7% over the last year but has slipped 13% over the last three months. It is on a three week losing streak but is approaching a familiar zone near the $30 level.
Looking at the daily chart, the stock completed a bullish morning star Tuesday while also filling an upside gap from the Aug. 4, 2025, session. Although it recorded a bearish death cross in April, shares near the $30 level are now attempting to find support at an area that previously acted as resistance between March and July of last year.
The stock has also outperformed medical device peers since the start of the year relative to the IHI, while a potential bullish MACD crossover is beginning to develop. Investors could consider entering here with a potential move toward $39 by year-end, representing roughly 31% upside from current prices. The bullish outlook remains intact above $28.50.
Smith & Nephew was trading around $30 Wednesday.
Glaukos, a medical technology company focusing on eye disorders, has achieved gains of 20% year to date and 48% over the last year. It is higher in six of the last eight weeks including a 15% gain the week ending May 1, with double the average daily volume.
This name has been a standout performer relative to the IHI since the start of the fourth quarter last year. It has delivered three consecutive double-digit earnings reactions, including a 26% surge on April 30 that also cleared a double-bottom-with-handle trigger at $127.10.
The current base has also shown constructive behavior, successfully retesting a prior cup base breakout level from last December. Earlier in the year, the stock found support near the very round $100 level as well as its 200-day simple moving average in both January and March.
Looking ahead, a move toward $162 by late 2026 would represent 19% upside from current levels. Remain bullish above $125.
Glaukos was trading around $136 Wednesday.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 13, 2026 14:52 ET (18:52 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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