This medical technology giant is a solid pick for investors looking for a safe position in the health care sector. Medtronic PLC (NYSE: MDT) develops, manufactures, distributes and sells device-based medical therapies to hospitals, physicians, clinicians and patients worldwide.
The company announced earlier this summer that Blackstone’s life sciences division would invest $337 million into the research and development of its diabetes device technologies. Under the terms of the agreement, Medtronic will receive funding for four diabetes programs over the next several years. Medtronic’s engineering, clinical and regulatory teams will conduct the development work for the programs.
Blackstone’s investment is sought to pull forward specific programs for its diabetes pump and continuous glucose monitoring pipeline devices that aim to address unmet patient needs. If the programs are successful, Medtronic will pay royalties that are expected to be in the low- to mid-single-digit range as a percentage of sales.
Medtronic stock investors receive a 2.23% dividend. The $120 Jefferies price target compares to the $115.83 consensus target and the most closed close at $101.96.
This leading medical devices company is a big beneficiary in the aging of America thesis. Stryker Corp. (NYSE: SYK) operates in two business segments. Its orthopedic implants business produces implants used in joint replacement, trauma, spine and craniomaxillofacial procedures. The MedSurg segment produces surgical equipment (other than orthopedic hardware), as well patient handling and emergency medical equipment.
The company is finishing a cash tender agreement to acquire 100% of the issued and outstanding shares of Wright Medical Group. Founded in 1950 and with global sales reaching $1 billion, Wright Medical Group has a presence in upper extremities (shoulder, elbow, wrist and hand), lower extremities (foot and ankle) and biologics markets. The acquisition of Wright Medical is expected to complement Stryker’s trauma and extremities business while also strengthening the latter’s position in this super-high growth silo.
Shareholders receive a 1.10% dividend. Jefferies has set a $225 price target. The consensus target is $218.23, and the last Stryker stock trade on Friday was reported at $208.30.
This large-cap medical devices play may be better suited for more conservative growth accounts. Zimmer Biomet Holdings Inc. (NYSE: ZBH) designs, manufactures and markets musculoskeletal health care products and solutions globally.
The company provides orthopedic reconstructive products, such as knee and hip replacement products. Its SET products include surgical, sports medicine, biologics, foot and ankle, extremities and trauma products. Its spine products included medical devices and surgical instruments. It has face and skull reconstruction products, as well as products that fixate and stabilize the bones of the chest to facilitate healing or reconstruction after open heart surgery or trauma, or for deformities of the chest.
Zimmer Biomet also offers dental products, including dental reconstructive implants and dental prosthetic and regenerative products, and bone cement and office-based technology products. The company’s products and solutions are used to treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues.
Shareholders receive just a 0.72% dividend. The Jefferies price target is $167. The consensus target is $149.44, and Zimmer Biomet stock closed at $137.69.
These five high-conviction medical technology health care ideas from Jefferies all make sense for investors looking to gain exposure to a sector that should continue to do well during the fourth quarter, into 2021 and for years to come, given the aging population both here and around the world.
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