4 Medical Product Stocks to Watch From a Challenging Industry

The Zacks Medical - Products industry is expected to face growing uncertainty as the United States reimposes tariffs. Tariffs on medical devices — rising from 10% to 30% on Chinese-made components — may disrupt U.S. MedTech economics, especially for manufacturers bound by fixed-price hospital contracts. Many are lobbying for exemptions to avoid unmanageable input costs.

While U.S. PPE producers may benefit from reduced competition with subsidized Chinese firms, analysts caution that suppliers could shift assembly to tariff-exempt countries like Mexico or Canada. In the near term, low-margin device makers face mounting supply-chain and cost pressures. PPE makers may push to gain share, but hospitals could be caught between rising prices and potential equipment shortages.

Industry participants, such as Insulet PODD, MacroGenics MGNX, Cellectar Biosciences CLRB and Allurion Technologies ALUR, have adapted to changing consumer preferences, and most of them are witnessing a rise in their share price. These companies also carry a favorable Zacks Rank.

Industry Description

The industry includes companies that provide medical products and cutting-edge technologies for healthcare services. These companies are primarily focused on research and development and cater to vital therapeutic areas like cardiovascular, nephrology and urology devices.

The increase in procedure volumes is driving sales, particularly for surgical products and services. At the same time, cost-cutting measures are helping companies improve their bottom-line performance.

However, supply-chain disruptions, exacerbated by ongoing conflicts, continue to affect the availability of critical materials, such as semiconductor chips used in medical product development. Inflationary pressures and labor shortages are also straining the industry players' gross and operating margins. These challenges are expected to persist in 2025.

Major Trends Shaping the Future of the Medical Products Industry

AI, Medical Mechatronics & Robotics: The increasing adoption of minimally invasive, robot-assisted surgeries, automated home care, IT-driven patient management, and value-based payment models underscores the rising influence of AI in the Medical Products sector. At the forefront is mechatronics — a fusion of electronics, machine learning, and mechanical engineering — driving innovation across the industry. Companies are making significant progress in AI, robotics, and medical mechatronics, with robotic surgical platforms enabling less invasive procedures and reducing patient trauma.

Meanwhile, 3D printing is reshaping the landscape, now used to produce stem cells, blood vessels, heart tissue, prosthetics and skin. These advances highlight the sector’s transformative shift toward precision, personalization and improved clinical outcomes.

Rising Demand for IVD: The COVID-19 pandemic led to a rise in global demand for diagnostic testing kits to curb the spread of the virus. Testing became a pressing need, leading to a shift in the IVD product pipeline, with many rapid, point-of-care devices entering development. Diagnostic kit manufacturers not only received emergency use authorization from the FDA but also bolstered production to help address testing shortages. Industry players anticipate significant demand for rapid diagnostic testing in the future and are poised to capitalize on this opportunity.

Emerging Markets Hold Promise: Driven by growing medical awareness and rising economic prosperity, emerging economies are experiencing strong demand for medical products. Factors such as aging populations, more relaxed regulatory environments, affordable skilled labor, increasing household wealth, and government investment in healthcare infrastructure make these markets highly attractive to global medical device companies.

Zacks Industry Rank

The Zacks Medical Products industry falls within the broader Zacks Medical sector.

It currently carries a Zacks Industry Rank #162, which places it in the bottom 34% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Before we present a few medical product stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Performance

While the industry has outperformed its own sector, it has underperformed the Zacks S&P 500 composite in the past year.

Stocks in this industry have collectively risen 10% against the Zacks Medical sector’s decline of 15.6%. The S&P 500 has increased 11.6% in the same time frame.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing medical stocks, the industry is currently trading at 20.3X compared with the S&P 500’s 19.9X and the sector’s 19.4X.

Over the past five years, the industry has traded as high as 29.2X and as low as 17.9X, with the median being at 22.1X, as the charts show.

Price-to-Earnings Forward Twelve Months (F12M)

Price-to-Earnings Forward Twelve Months (F12M)

4 Promising Medical Product Stocks

Insulet is a leading developer, manufacturer and marketer of the Omnipod Insulin Management System. The system includes a self-adhesive, small, lightweight disposable tubeless Omnipod device and a wireless and handheld Personal Diabetes Manager.

Insulet is advancing its strategic efforts to enhance diabetes management in a rapidly expanding global market, with millions of new diagnoses anticipated. The adoption of continuous glucose monitoring (CGM) is increasing among patients with both Type 1 and Type 2 diabetes. In February, the company launched a limited release of Omnipod Discover, a digital platform designed to boost patient engagement through personalized data tracking, insulin usage insights and educational tools.

Insulet is also expanding its global reach, transitioning from Omnipod GO to Omnipod 5 as the primary solution for Type 2 diabetes patients on basal-only insulin. In August, the FDA approved an expanded label for Omnipod 5 to include Type 2 diabetes, strengthening confidence in this market’s growth. The fourth quarter saw sequential and year-over-year growth in new U.S. customers across both types of diabetes.

However, Insulet faces intense competition from large corporations and agile start-ups. Macroeconomic and geopolitical uncertainties, supply-chain challenges, and reliance on third-party suppliers, especially in China, pose ongoing risks.

For this Acton, MA-based company, the Zacks Consensus Estimate for 2025 revenues indicates a year-over-year improvement of 18.1%. The consensus estimate for earnings indicates growth of 32.1%. It delivered a trailing four-quarter earnings surprise of 27.52%, on average. Presently, the company carries a Zacks Rank #2 (Buy).

Price and Consensus: PODD

MacroGenics is focused on discovering and developing innovative monoclonal antibody-based therapeutics. The company has a diverse portfolio of product candidates focused on three therapeutic areas — oncology, autoimmune disorders and infectious diseases.

MGNX reported strong financial results in 2024, with total revenues rising to $150 million from $58.7 million in 2023. This growth was driven largely by an $85 million milestone payment from Incyte, part of $118.9 million in collaboration revenues. Product margins and contract manufacturing added $16.4 million and $13.1 million, respectively. The $36.3 million gain from selling MARGENZA to TerSera provided non-dilutive capital, extending the cash runway through mid-2026.

Clinically, MacroGenics advanced its oncology pipeline, completing enrollment in the Phase 2 LORIKEET trial for lorigerlimab. Two ADC candidates, MGC026 and MGC028, progressed in Phase 1 studies using Synaffix’s TOP1i payload technology.

However, rising R&D and SG&A costs, including an $8 million one-time fee and CEO transition expenses, widened the net loss to $67 million. Pipeline attrition was marked by discontinuing vobra duo. Currently, MGNX carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

For this Rockville, MD-based company, the Zacks Consensus Estimate for 2025 revenues is pegged at $96.3 million. The consensus mark for loss is pinned at $2.21 per share. The company delivered a trailing four-quarter average earnings surprise of 76.50%.

Price and Consensus: MGNX

Cellectar Biosciences is developing agents to detect, treat and monitor a broad spectrum of cancers. It uses a novel phospholipid ether platform technology as a targeted delivery and retention vehicle.The company is positioning itself for growth, supported by significant clinical progress and an expanding radiopharmaceutical pipeline.

The company’s lead asset, iopofosine I-131, shows strong clinical results in relapsed/refractory Waldenstrom’s macroglobulinemia, with a 98.2% clinical benefit rate and 83.6% overall response in the Phase 2 CLOVER-WaM study. FDA alignment on Phase 3 design boosts chances for accelerated approval. Two early-stage radiotherapeutic programs — CLR 121225 (alpha-emitter) and CLR 121125 (Auger-emitter) — target hard-to-treat tumors using the proprietary Phospholipid Drug Conjugate platform for precise delivery.

The company is pursuing non-dilutive funding to extend its $23.3 million cash runway through fourth-quarter 2025. Challenges include NDA delays, a 60% workforce cut, and the need for partnerships and funding to sustain progress and investor confidence. Currently, CLRB carries a Zacks Rank #2.

For this Madison, WI-based company, the Zacks Consensus Estimate for 2025 loss is pinned at 67 cents per share. The company delivered a trailing four-quarter average earnings surprise of 20.08%.

Price and Consensus: CLRB

Allurion Technologies is dedicated to ending obesity. The Allurion Program is a weight loss platform that combines the Allurion Gastric Balloon, the only swallowable, procedure-less gastric balloon for weight loss, the Allurion Virtual Care Suite, including the Allurion Mobile App for consumers, Allurion Insights for health care providers featuring the Iris AI Platform, and the Allurion Connected Scale and Health Tracker devices.

The company is capitalizing on strong clinical synergies and a focused commercial strategy to drive long-term growth. Its flagship Allurion Balloon, combined with low-dose GLP-1 therapies, achieves up to 18% body weight loss while preserving lean muscle mass. Supported by remote tools like the Allurion Virtual Care Suite and AI-powered Coach Iris, this offers a non-invasive alternative to bariatric surgery. The launch of a next-generation balloon and a revamped B2B2C model, alongside organizational restructuring and resumed sales in France, aims to boost revenues through 2025. However, fourth-quarter 2024 revenues fell 32% year over year due to suspended French operations and macroeconomic challenges. Gross margins suffered from lower volumes and inventory write-offs. U.S. market entry awaits FDA approval. Despite a 39% reduction in expenses, the company reported a $7.95 loss per share, with further cost cuts planned for 2025.

For this Natick, MA-based company, the Zacks Consensus Estimate for 2025 revenues is pinned at $28.6 million. The consensus estimate for loss is pegged at $4.19 per share. It delivered a trailing four-quarter average negative earnings surprise of 11.118%. Presently, the company carries a Zacks Rank #2.

Price and Consensus: ALUR

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