BTIG is particularly bullish on ABT, GKOS, ZBH, IRTC & RXST in 2024
The medical tech sector of US stocks will be more stable in 2024 with the panic caused by GLP-1 diet drugs, supply chain problems and high interest rates gradually subside, analysts at BTIG said in a report released on Friday.
Analysts said the sector may not be able to achieve growth similar to 2023, driven by pent-up demand related to the pandemic, but company profit and loss and supply chain management should improve, and the adverse impact of inflation and prices should be reduced. Still, year-over-year data pressure could be a topic in the first half of 2024.
The investment bank also expects the medtech sector to benefit from the 2024 election cycle, saying the sector tends to outperform the $S&P 500(.SPX)$ in election years. BTIG analysts note that the performance of medtech relative to biotech and pharmaceutical stocks in this upcoming election year is likely to be more stable, as drug prices and healthcare issues have been a political hot button.
Finally, the Fed ends expectations of rate hikes may reactivates financing conditions.
BTIG's 2024 medtech recommendations include $Abbott Laboratories(ABT)$ $Glaukos(GKOS)$ $Zimmer Biomet(ZBH)$ $Irhythm Technologies Inc.(IRTC)$ $RxSIGHT, INC.(RXST)$.
1. $Abbott Laboratories(ABT)$
Analysts at BTIG say Abbott is one of the best stocks in 2024, whether the environment for healthcare stocks improves or continues to fluctuate, whether investors start chasing growth or keep a low profile.
There are a number of reasons, including mid-double-digit growth in medical device sales, a recovery in the nunuance business, improved margins, product launches, a solid balance sheet, the king of dividend status, and the company's ability to capitalize on M&A opportunities and implement share buybacks.
2. $Irhythm Technologies Inc.(IRTC)$
At the same time, the investment bank said iRhythm has multiple catalysts on the horizon, including a warning letter from the FDA that could potentially be resolved.
Combined with a better profit outlook and "attractive" valuations compared to peers, they believe IRTC shares can outperform in 2024.
3. $Zimmer Biomet(ZBH)$
BTIG said it has become more constructive on $Zimmer Biomet(ZBH)$ in 2024, with "reasonable" valuations, upside opportunities for revenue growth and operating margin leverage, and improved adjusted earnings per share growth.
4. $Glaukos(GKOS)$
As for Glaukos, BTIG noted that the company received earlier than expected FDA approval for its glaucoma drug iDose TR, which boosted the stock.
However, BTIG also sees "upside potential" in the company's core minimally invasive glaucoma surgery business, and with iDose's approval, this "story" will become clearer and brighter in fiscal 2024. If Glaukos' iDose could be reused, they believe the stock would appreciate quickly.
5. $RxSIGHT, INC.(RXST)$
For RxSight, BTIG notes that the stock is up more than 200% year-to-date. However, neither $Alcon Inc.(ALC)$ nor $Johnson & Johnson(JNJ)$ are expected to have major intraocular lens product cycles next year, so BTIG believes RXST will accelerate to become a billion-dollar company.
BTIG has "buy" ratings on all five medtech stocks.
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