Technology is reshaping healthcare in ways we couldn’t have imagined a decade ago. From AI-powered diagnostics to wearable health devices, innovations are making patient care faster, more accurate, and more accessible. With healthcare IT advancing at such a rapid pace, investors might consider fundamentally strong stocks Medtronic plc (MDT), McKesson Corporation (MCK), and Embecta Corp. (EMBC) for long-term returns.
The widespread adoption of connected devices and AI-powered tools is streamlining operations, addressing workforce shortages, and improving patient-clinician interactions. The healthcare IT market is projected to reach $592.49 billion by 2025, growing at an impressive CAGR of 16.8%.
One of the biggest game-changers is artificial intelligence (AI). AI-driven tools are improving early disease detection, helping doctors make more precise diagnoses, and even predicting potential health risks before symptoms appear. This not only enhances patient outcomes but also reduces healthcare costs. The AI healthcare market alone is set to hit $164.16 billion by 2030, expanding at a CAGR of 49.1%.
Beyond AI, connected medical devices and robotic-assisted procedures also transform patient care. Wearable devices now track vital signs in real-time, allowing doctors to monitor patients remotely and intervene before health issues escalate. Meanwhile, robotic-assisted surgeries increase precision, reduce recovery times, and minimize complications.
As a result, the medical devices industry is poised to reach $893.07 billion by 2029, exhibiting a CAGR of 7%. Regulatory approvals are also increasing, with the FDA greenlighting over 950 AI/ML-enabled medical devices for more precise treatments and better patient outcomes.
Given these favorable market trends, let’s look at the fundamental aspects of the aforementioned stocks in detail:
Medtronic plc (MDT)
Headquartered in Dublin, Ireland, MDT provides healthcare technology solutions. It develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. The company operates through four segments: Cardiovascular Portfolio; Neuroscience Portfolio; Medical Surgical Portfolio; and Diabetes Operating Unit.
On January 13, 2025, MDT announced that the Centers for Medicare & Medicaid Services (CMS) had initiated a national coverage analysis for renal denervation, aiming to develop a Medicare coverage policy for hypertension treatments. This move supports MDT’s Symplicity Spyral RDN system, potentially increasing patient access and strengthening the company’s position in the healthcare technology market.
In the same month, buoyed by its strong financial performance, the company paid a dividend of $0.70 per share for the third quarter of fiscal year 2025. It pays an annual dividend of $2.80, which translates to a dividend yield of 3.02% at the prevailing price levels. Its four-year average dividend yield is 2.87%. Moreover, its dividend payouts have increased at a CAGR of 4.1% over the past three years.
The stock’s trailing-12-month gross profit margin of 65.40% is 11.9% higher than the industry average of 58.46%. Likewise, its trailing-12-month EBIT and levered FCF margins of 19.77% and 15.19% are considerably above their respective industry averages of 2.69% and 2.61%.
MDT’s revenue increased 2.5% year-over-year to $8.29 billion in the fiscal 2025 third quarter that ended on January 24, 2025. Its non-GAAP operating profit came in at $2.17 billion, up 6.2% year-over-year. In addition, the company’s non-GAAP net income reached $1.79 billion or $1.38 per share, indicating an increase of 3.4% and 6.2%, respectively, from the prior year quarter.
The consensus revenue estimate of $8.85 billion for the fourth quarter (ending April 2025) represents a 3.1% increase year-over-year. The consensus EPS estimate of $1.61 for the same period indicates a 9.9% growth from the previous year. The company has an impressive surprise history, surpassing the consensus revenue and EPS estimates in each of the trailing four quarters.
The stock has surged 5.2% over the past six months and 7.7% year-to-date to close the last trading session at $86.15.
MDT’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Stability and Sentiment. Among 131 stocks in the Medical - Devices & Equipment industry, it is ranked #19. To access MDT’s Growth, Value, Momentum, and Quality ratings, click here.
McKesson Corporation (MCK)
MCK is an international provider of healthcare services. The company operates in four segments: U.S. Pharmaceutical; Prescription Technology Solutions (RxTS); Medical-Surgical Solutions; and International. The company distributes branded, generic, specialty, biosimilar, and over-the-counter pharmaceutical drugs and other healthcare-related products.
On February 4, 2025, MCK signed a definitive agreement from Quad-C to acquire a controlling interest in PRISM Vision Holdings, LLC, a premier provider of general ophthalmology and retina management services.
MCK purchased its controlling interest for approximately $850 million in cash, representing approximately 80% ownership. The strategic acquisition marks an important step towards advancing the company’s capabilities as a national partner in retina and ophthalmology care.
On January 30, the company’s boards of directors declared a quarterly dividend of 71 cents per share of common stock. The dividend is payable on April 1, 2025, to stockholders of record on March 3, 2025.
With 17 years of consecutive dividend growth, MCK pays an annual dividend of $2.84, which translates to a dividend yield of 0.48% at the prevailing price levels. Its four-year average dividend yield is 0.59%. Moreover, its dividend payouts have increased at a CAGR of 14.3% over the past three years.
In terms of trailing-12-month, MCK’s net income margin, ROTC, and ROTA of 0.82%, 55.30%, and 3.98% compare with negative industry averages of 4.19%, 19.58%, and 25.69%, respectively.
During the third quarter that ended on December 31, 2024, MCK’s revenues increased 17.8% year-over-year to $95.29 billion, and its adjusted operating profit increased 16% year-over-year to $1.46 billion. The company’s attributable net income grew 49.2% from the year-ago value to $879 million, while its adjusted EPS came in at $8.03, up 3.7% year-over-year.
Street expects MCK’s revenue and EPS for the fourth quarter (ending March 2025) to increase 22.7% and 58.6% year-over-year to $93.70 billion and $9.80, respectively. Moreover, the company topped the consensus EPS estimates in three of the trailing four quarters, which is promising.
MCK’s stock has increased 19.6% over the past year to close the last trading session at $599.42.
MCK’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
MCK also has a B grade for Growth, Value, Stability, and Sentiment. Within the Medical – Services industry, it is ranked #9 out of 63 stocks. Click here to access additional MCK ratings for Momentum and Quality.
Embecta Corp. (EMBC)
EMBC is a medical device company that provides various solutions to enhance the health and well-being of people with diabetes. Its products include pen needles, syringes, safety injection devices, and digital applications to assist people in managing their condition.
On February 6, 2025, the company declared a quarterly dividend of $0.15 per share, payable to its shareholders on March 14. It pays an annual dividend of $0.60, which translates to a dividend yield of 4.04% at the prevailing price levels. Its four-year average dividend yield is 2.54%. EMBC has a payout ratio of 23.90%.
The stock’s trailing-12-month gross profit margin of 64.33% is 10% higher than the 58.46% industry average. Similarly, its 8.67% trailing-12-month EBITDA margin is 46.3% higher than the 5.92% industry average.
EMBC’s revenues for the third quarter, which ended on December 31, 2024, amounted to $261.90 million. It reported a non-GAAP operating income of $80.50 million, indicating a 3.9% growth from the prior year quarter. The company’s non-GAAP net income for the quarter came in at $38.30 million or $0.65 per share, up 8.5% and 6.6% year-over-year. Also, its adjusted EBITDA increased 7.6% year-over-year, amounting to $97.30 million.
Analysts expect EMBC’s revenue for the third quarter (ending June 2025) to increase 3.1% year-over-year to $280.88 million. Its EPS for the same quarter is expected to grow 6.8% from the prior year to $0.79. Moreover, the company surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of EMBC have surged 24.5% over the past nine months to close the last trading session at $15.30.
It’s no surprise that EMBC has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Value and a B for Quality. Out of 131 stocks in the Medical - Devices & Equipment industry, it is ranked #2.
Beyond what is stated above, we’ve also rated EMBC for Growth, Momentum, Stability, and Sentiment. Get all EMBC ratings here.
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MDT shares . Year-to-date, MDT has gained 7.75%, versus a 4.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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