Initiating Coverage of MedTech: Time to Operate on This Beaten-Down Sector

Research evidence excerpt

Initiating Coverage of MedTech: Time to Operate on This Beaten-Down Sector

July 8, 2026 | 16:03 ET~

Medical Supplies & Devices

Initiating Coverage of MedTech: Time to Operate on Medical Supplies & Devices

This Beaten-Down Sector Vik Chopra Analyst

vik.chopra@bmo.com (917) 581-0141

Legal Entity: BMO Capital Markets Corp.

Bottom Line:

MedTech stocks are trading at close to their widest discount to the S&P 500 in a decade

Exhibit 1 - MedTech valuation close to 10-year(~31% below 10-year relative average) on a de-rating largely driven by fund flows and

lows vs. the S&P 500

policy noise, not fundamentals, which appear healthy with generally broad-based 1Q

1.60x

beats. Our proprietary hospital survey suggests procedure demand remains resilient, with 1.50x

1.40x

early signs of 2027 CapEx budget formation supporting sustained spending visibility. We 1.30x 1.26x

1.20x

see MedTech as an under-owned, under-appreciated sector where the marginal buyer is 1.10x

1.00x

absent, having rotated into AI/Tech. We see this dislocation as a particularly attractive 0.90x

opportunity to build positions in best-in-breed franchises ahead of a potential re-rating. 0.80x0.70x 0.87x

Our highest-conviction names are ISRG (our #1 All-Star, ~31% discount to three-year

historical multiple, strongest fundamental profile in the group, in our view), GMED (sector-

leading margin expansion driven in part by Nevro accretion), and TFX (2027 EPS inflection S&P 1500 Health Care Equipment / S&P 500 Average

doesn't seem fully baked into consensus, leaving room for potential upside).

Source: BMO Capital Markets, Bloomberg

Key Points

We initiate coverage on Medical Supplies & Devices with a constructive view,

anchored on a contrarian setup. The sector has de-rated close to its widest valuation