While artificial intelligence may be useful for a variety of purposes – including asking silly questions we’re afraid to pose in real life – the ultimate end game for digital intelligence could be to advance the human condition, which brings us to medical AI stocks.
When conducted in a controlled environment, AI can help accelerate productivity. It stands logically, then, that the innovation can help medical professionals better care for their patients. Indeed, the numbers reflect this trajectory.
According to MarketsandMarkets, the global AI in the healthcare sector may reach a valuation of $20.9 billion by the end of this year. Further, by 2029, the segment could be worth $148.4 billion, implying a compound annual growth rate (CAGR) of 48.1%.
It’s easily one of the most compelling categories in the equities sector. With that, below are medical AI stocks to consider.
Stryker (SYK)
Specializing in the medical device category, Stryker (NYSE:SYK) offers multiple healthcare solutions. These include implants used in joint replacement and trauma surgeries along with surgical equipment and navigation systems. Last year, management announced that it would significantly increase its presence in the AI space. By the final quarter of 2023, the company had 23 patents involving digital intelligence.
Notably, these patents focus on improving efficiency and safety in the operating room through innovative technologies. It’s no surprise, then, that SYK stock carries a moderate buy consensus view. While the average price target of $358.33 may be modest, the most optimistic target calls for $390, implying 19% upside.
Financially, Stryker isn’t what you would call the most exciting idea among medical AI stocks. It is, however, consistent, ultimately pulling off a positive earnings surprise of 5.18% in fiscal 2023. For the current fiscal year, experts are looking at earnings per share of $11.85 on revenue of $22.18 billion. That’s a decent improvement over last year’s results of $10.6 EPS on sales of $20.5 billion.
Medtronic (MDT)
Another medical device specialist, Medtronic (NYSE:MDT) offers myriad relevancies. It’s perhaps best known for its Cardiovascular Portfolio business, which offers implantable cardiac pacemakers, cardioverter defibrillators and cardiac resynchronization therapy devices. In the AI space, the company is pushing to realize the full potential of personalized healthcare technology. Through innovations such as data analytics, Medtronic can offer superior chronic disease management.
Again, similar to Stryker, Medtronic should not be confused as a particularly exciting idea among medical AI stocks. Rather, the beauty of the business from an investment standpoint is the consistent profitability. Last fiscal year, the company beat all four of its bottom-line targets. The average positive earnings surprise came out to 4.45%.
For the current fiscal year, analysts anticipate EPS of $5.20 on sales of $32.24 billion. That’s modest compared to last year’s print of $5.29 EPS on sales of $31.23 billion. However, long-term projections call for revenue to eventually ride up to nearly $41 billion by 2029. Plus, analysts peg shares a consensus moderate buy with a $93.87 price target, projecting almost 17% upside potential.
Moderna (MRNA)
A biotechnology firm made famous for forwarding a vaccine during the Covid-19 crisis, Moderna (NASDAQ:MRNA) discovers, develops and commercializes messenger-RNA therapeutics and vaccines for the treatment of infectious diseases. In addition, it provides solutions in the field of immune-oncology, rare diseases, autoimmune disorders and cardiovascular conditions. In November, management stated that it seeks to embed AI into every aspect of its organization.
Fundamentally, the move could potentially help accelerate new medical solutions. That makes MRNA stock a name worth watching closely. Analysts generally have high hopes, rating shares a consensus moderate buy with a $122.87 average price target. That implies almost 18% upside potential. Further, the high-side target hits $214, projecting almost 105% growth.
On a financial note, the company is still working on its transition away from Covid-19 vaccine sales. Therefore, the projected comparisons are not pretty. By year’s end, sales could reach $4.18 billion, which would imply a 39% decrease from last year’s print. Nevertheless, the AI directive could boost demand over the long run.
Notably, by 2030, analysts are calling for revenue to hit nearly $31 billion. If you have the patience, MRNA could be one of the medical AI stocks to buy.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
