The United States boasts being the biggest MedTech market to date and is highly regarded for its innovation and technologically-advanced products across the world. A Kaloroma Information article validates the country’s dominance in the field, thanks to its more than $180 billion in revenues generated from all over the world.

Medical Device Tax Suspension

The medical device industry is booming with possibilities, courtesy of the two-year suspension of the infamous 2.3% Medical Device tax. The lifting of the tax makes scope for solid research and development (R&D), which is likely to benefit companies in the long run.

The 2.3% excise tax was implemented in 2013 under Obamacare, significantly affecting R&D. Per the Advanced Medical Technology Association lobbying group, this tax impaired medical innovation to a great extent, resulting in loss or lower job creation.

To address the problems, the Senate placed a temporary suspension on these taxes in the January 2016-December 2017 period.

The taxes were imposed again on Jan 1, 2018, only to be suspended on Jan 22 for another two years. The device tax suspension is one of the very few amendments to see a landslide bipartisan win in the House.

Since Jan. 22, the Medical Products industry has rallied 2.2%, significantly outperforming the S&P 500 index’s decline of 4% on account of political, cultural and legal troubles plaguing the markets worldwide.

Making the Right Picks

Against this backdrop, a few medical device stocks are well positioned on strong fundamentals and solid R&D prospects. We have used the Zacks Stock Screener to pick such stocks. We have also taken care to include stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) along with a Growth Score of A or B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 or 2 are better picks than most.

Intuitive Surgical, Inc. ISRG has a Growth Score of B.

In the past three months, shares of Intuitive Surgical have gained 10.1%, outperforming the industry’s decline of 13.7%.

The California-based company, with a Zacks Rank #1, recently announced that it is commencing direct operations in India through distributor Vattikuti Technologies Pvt. Ltd. Moreover, the company’s flagship da Vinci SP surgical system for urologic surgical procedures was recently approved by the FDA.

In the last 60 days, the Zacks Consensus Estimate for Intuitive Surgical’s earnings per share rose 3.8% to $2.43.

Abiomed, Inc. ABMD has a Zacks Rank #1 and a Growth Score of B. You can see see the complete list of today’s Zacks #1 Rank stocks here.

In the past three months, shares of Abiomed have gained 38.5%, outperforming the industry’s decline of 13.7%.

The Massachusetts-based company recently replaced Wyndham Worldwide Corp. on the S&P 500 list.

In the last 60 days, the Zacks Consensus Estimate for Abiomed’s earnings per share rose 1.3% to 80 cents.

Varian Medical Systems, Inc. VAR has a Zacks Rank #2 and a Growth Score of B.

In the past six months, shares of Varian Medical have rallied 7.6%, faring better than the industry’s fall of 7.2%.

The California-based provider of radiotherapy solutions has of late been targeting expansion in Africa. The company’s coveted Halcyon system has been adopted by three different cancer centers in northern and southern Africa. Furthermore, Varian Medical recently signed a software technology training and education cooperation agreement with the Brazil Ministry of Health (MOH) and seven universities and science and technology institutions (ICTs) in Brazil.

Over the last 60 days, the Zacks Consensus Estimate for Varian Medical’s earnings per share remained stable.

Surmodics, Inc. SRDX has a Zacks Rank #2 and a Growth Score of A.

In the past six months, shares of Surmodics have gained 60.2%, outperforming the industry’s growth of 10.1%.

The Minnesota-based provider of medical device recently signed an agreement with Embolitech to acquire an innovative thrombectomy platform technology and related intellectual property with broad potential peripheral vascular applications. It will enhance the company’s focus on developing highly differentiated whole-product solutions.