The Zacks Medical - Products industry is likely to face rising uncertainty amid tariff imposition by the United States.Tariffs reinstated on medical devices — from 10% on most imports to as high as 145% on Chinese-made parts — threaten to upset U.S. MedTech economics. Manufacturers of complex devices are lobbying for carve-outs to avoid steep input-cost hikes that they cannot simply pass through under fixed-price hospital contracts.

Meanwhile, U.S. PPE makers are likely to benefit from the levies, hoping barriers will erode heavily subsidized Chinese competition. Yet analysts caution that many suppliers may merely shift assembly to tariff-friendly Mexico and Canada rather than fully onshoring production. In the near term, lower-margin device OEMs are likely to face supply-chain complexity and budgetary strain while PPE producers may try to gain market share, leaving hospitals caught between higher prices and potential equipment shortages.

However, U.S. hospitals are likely to see budget increases due to improving demand and lower interest rates, which might boost medical product sales. While industry players have experienced a recovery in sales over recent quarters, these persistent headwinds continue to pressure profit margins. Additionally, declining demand for COVID-19-related products (which has negatively impacted revenues) and weak performance in the Chinese market are further hindering growth.

Industry participants like 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 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. The companies are primarily focused on research and development and cater to vital therapeutic areas like cardiovascular, nephrology and urology devices.

The rise in procedure volumes is driving sales, particularly for surgical products and services. At the same time, cost-cutting measures are helping companies enhance 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 and may increase with tariff imposition.

Major Trends Shaping the Future of the Medical Products Industry

AI, Medical Mechatronics & Robotics: The rising adoption of minimally invasive robot-assisted surgeries, self-automated home-based care, use of IT in facilitating quick and improved patient care, and the shift of the payment system to a value-based model underscore the growing influence of AI in the Medical Products space. In fact, mechatronics — a high-end technology incorporating electronics, machine learning and mechanical engineering — is rapidly becoming a defining characteristic of the space. Several companies have shown substantial prowess in AI, robotics and medical mechatronics.

Advancements in robot-assisted surgical platforms continue to be crucial for minimally invasive surgeries that help reduce the trauma associated with open surgery. The benefits of mechatronics have been demonstrated in the form of 3D printing, which has altered the face of the medical devices industry. Currently, 3D printing is being used to print stem cells, blood vessels, heart tissues, prosthetic organs and skin.

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 the need of the hour and led to a shift in the IVD product pipeline, with many rapid, point-of-care devices going into development. Diagnostic kit-makers not only received emergency use authorization from the FDA but also bolstered production to aid testing shortages. The industry players anticipate significant demand for rapid diagnostic testing in the future and are poised to capitalize on the same.

Emerging Markets Hold Promise: Given the rising medical awareness and economic prosperity, emerging economies have been witnessing solid demand for medical products. An aging population, relaxed regulations, cheap skilled labor, increasing wealth and the government’s focus on healthcare infrastructure make these markets extremely lucrative for global medical device players.

Zacks Industry Rank

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

It currently carries a Zacks Industry Rank #186, which places it in the bottom 25% 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 6.3% against the Zacks Medical sector’s decline of 10%. The S&P 500 has increased 8% 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.

The company is making significant strides in its key strategic imperatives to help patients manage diabetes efficiently. As the global diabetes market rapidly expands, millions of people are expected to be newly diagnosed. In addition, there has been an accelerated adoption of CGM among people living with Type 1 and Type 2 diabetes. PODD announced a limited market release of Omnipod Discover, a digital platform for personalized data management, insulin usage insights and learning materials to optimize patient engagement and outcomes in February.

Insulet is expanding its global presence in a targeted and strategic manner. The company is now shifting from Omnipod GO to Omnipod 5 as its primary offering for people with type 2 diabetes on basal-only insulin. In August, Insulet received FDA clearance for type 2 label expansion for Omnipod 5. The company is highly optimistic about the opportunity in the type 2 diabetes market and is building upon its strong established foundation for long-term growth.

However, Insulet operates in a highly competitive environment, dominated by firms ranging from large multinational corporations with significant resources to start-ups. Moreover, the continuing worldwide macroeconomic and geopolitical uncertainty may reduce demand for Insulet’s products, intensify competition, exert pressure on prices, dent supply and lengthen the sales cycle. In addition, Insulet continues to experience challenges stemming from the global supply-chain disruption. The company’s reliance on third-party suppliers, especially in China, could face potential risks from tariff imposition.

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 a strong financial performance in 2024, with total revenues reaching $150 million compared with $58.7 million in 2023. This growth was largely driven by an $85 million milestone payment from Incyte, included in $118.9 million from collaborations, along with $16.4 million in product margins and $13.1 million in contract manufacturing revenues. The sale of MARGENZA to TerSera also accounted for a $36.3 million gain, supporting a projected cash runway through the second half of 2026.

MacroGenics made notable progress with its pipeline. Enrollment was completed in the phase 2 LORIKEET trial for lorigerlimab. The company also advanced two ADC candidates, MGC026 and MGC028, both utilizing Synaffix's novel TOP1i payload technology. MGC026 is progressing well with the phase 1 dose expansion study, while MGC028 began phase 1 trial earlier this year. These developments underscore a diversified and advancing oncology pipeline.

However, rising R&D and SG&A expenses widened the annual net loss to $67 million. Additionally, the discontinuation of vobra duo reflects pipeline attrition risks. 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.

A key driver is the strong clinical data from its lead asset, iopofosine I-131, for relapsed/refractory Waldenstrom’s macroglobulinemia (WM). The phase 2 CLOVER-WaM study demonstrated a 98.2% clinical benefit rate and 83.6% overall response rate — exceptional figures for a heavily pretreated patient population. These results, combined with the FDA’s alignment on the phase 3 trial design and clear regulatory guidance, enhance the asset’s potential for accelerated approval.

The company is also advancing two novel early-stage programs — CLR 121225 (alpha-emitter) and CLR 121125 (Auger-emitter) — targeting high-need solid tumors such as pancreatic and triple-negative breast cancer. Its proprietary Phospholipid Drug Conjugate (PDC) platform enables highly targeted delivery of radiotherapeutics, offering a competitive edge in efficacy and safety. CLRB’s strategy to pursue non-dilutive funding through potential licensing deals is a further positive, aiming to extend its $23.3 million cash runway through the fourth quarter of 2025.

However, delay in iopofosine’s NDA submission negatively impacted the stock and necessitated a 60% workforce reduction. Securing partnerships and funding to support ongoing trials is essential to maintaining momentum and shareholder 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 leveraging strong clinical synergies and a refined commercial strategy to position itself for long-term growth. The company's Allurion Balloon, when combined with low-dose GLP-1 therapies, is demonstrating compelling results in obesity management — achieving 18% body weight loss while preserving or increasing lean muscle mass. This combination approach, supported by remote monitoring tools like the Allurion Virtual Care Suite and AI coach “Coach Iris,” offers a differentiated, non-invasive alternative to bariatric surgery. Additionally, Allurion has launched a next-gen balloon and expects revenue acceleration through 2025, driven by a new B2B2C model, commercial reorganization and returning sales in France.

However, ALUR continues to face challenges. Fourth-quarter 2024 revenues declined 32% year over year due to temporary suspension of French operations and macroeconomic pressures. Gross margin was impacted by lower production volumes and inventory write-offs. The path to U.S. market entry is still pending FDA approval, and while the restructuring reduced expenses by 39% during the fourth quarter, the company reported a loss of $7.95 per share. The company’s restructuring initiatives are estimated to drive operating expenses lower by 50% in 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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Insulet Corporation (PODD) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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