We recently compiled a list of the 10 High Growth Healthcare Stocks to Invest in Now. In this article, we are going to take a look at where Globus Medical, Inc. (NYSE:GMED) stands against the other high growth healthcare stocks.
Global Healthcare Spending Trends and Investment Opportunities
During lean economic times, investing in healthcare stocks is generally regarded as defensive. This is due to the fact that people typically do not cut back on their use of prescription medications or other essential healthcare services, even during difficult financial times. According to the Centers for Medicare and Medicaid Services (CMS), national healthcare spending is projected to reach an estimated $4.8 trillion in 2023 and grow at an annual rate of 5.6% between 2027 and 2032.
Global healthcare spending hit a record high in 2021 at $9.8 trillion, or 10.3% of global gross domestic product (GDP), according to a World Health Organization report released in December 2023. Public health spending, however, continued to rise globally, except for low-income nations, where government health spending fell due to their heavy reliance on foreign assistance. In 2021, high-income countries spent almost $4,000 per capita on health care, while 11% of the world’s population resided in nations that spent less than $50 per person annually. Furthermore, only 0.24% of global health spending went to low-income nations, although making up 8% of the world’s population. According to the report, public spending on health increased significantly during the height of the COVID-19 pandemic, but this growth is unlikely to continue in the long run as nations now prioritize economic issues like high inflation, slowing growth, and rising debt servicing. WHO Assistant Director-General for Universal Health Coverage, Life Course, Dr. Bruce Aylward, stated:
“Sustained public financing on health is urgently needed to progress towards universal health coverage. It is especially critical at this time when the world is confronted by the climate crisis, conflicts and other complex emergencies. People’s health and well-being need to be protected by resilient health systems that can also withstand these shocks.”
This year, the pharmaceutical, medical equipment and supplies, robotics, biotechnology, and neurodegenerative illnesses sub-spaces are the primary ones to watch in the healthcare industry. The emergence and development of glucagon-like Peptide-1 agonists (GLP-1s) is the primary trend of interest in the pharmaceutical industry. These treatments have had a substantial impact on weight loss medications and have completely altered the competitive landscape in this field. Pharmaceutical companies that sell weight-loss medications have also benefited from higher prescription volumes and sales as a result of the development of GLP-1s. For example, BlackRock reported that from 2019 to August 2023, GLP-1 prescription volumes increased at a compound annual growth rate of 45%. The development of Ozempic and Mounjaro, respectively, by top pharmaceutical manufacturers was a major factor in this expansion. Additionally, this has led to a recent increase in the popularity of weight loss medication stocks.
Our Methodology
For this article, we screened on stocks with a minimum market capitalization of $10 billion and a 5-year average revenue growth of approximately 30%. These stocks were then ranked according to their revenue growth performance.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A medical professional conducting a minimally invasive procedure using a cutting-edge medical device.
Globus Medical, Inc. (NYSE:GMED)
Revenue Growth: 26.35%
Globus Medical, Inc. (NYSE:GMED) is a leading medical device company that specializes in developing and manufacturing innovative musculoskeletal solutions. The company primarily focuses on creating implants, surgical instruments, and advanced technologies for spine and orthopedic procedures. With a five-year average revenue growth of over 26%, GMED is one of the best high growth stocks in the healthcare sector.
The Excelsius GPS robotic system and the incorporation of NuVasive’s Pulse platform have positioned Globus Medical, Inc. (NYSE:GMED) at the forefront of technological innovation in spine surgery.
Globus Medical, Inc. (NYSE:GMED) showcased strong financial growth in Q3 2024, with revenue surging 63.1% year-over-year to $626 million which was driven by a 60.3% increase in U.S. sales and a 74.8% rise in international sales. GAAP EPS soared by 3700%, largely attributed to the transformative acquisition of NuVasive, which enhanced its market presence and product portfolio. The company is enhancing manufacturing efficiencies and preparing for insourcing to achieve cost savings in the next two to three years. On the R&D front, GMED launched four new products, including the Excelsius Navigation Hub, its first freehand navigation solution.
At the end of Q3 2024, 36 hedge funds held stakes in Globus Medical, Inc. (NYSE:GMED), according to Insider Monkey’s database. Sculptor Capital emerged as the largest stakeholder, with investments valued at $1.6 billion. Street analysts have assigned the stock a consensus rating of Moderate Buy, with an average price target of $89.20, ranging from $80.00 to $100.00, suggesting a potential 6.71% upside from its current price of $83.59.
Overall GMED ranks 10th on our list of the high growth healthcare stocks to invest in now. While we acknowledge the potential of GMED as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than GMED but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.