iShares U.S. Medical Devices ETF: Monitor for Long-Term Opportunities

The iShares U.S. Medical Devices ETF (IHI) has strong industry trends, but its valuation is too high for a buy opportunity. Investors with long-term objectives may monitor the ETF for a potential purchase once valuation metrics drop. For now, it is a hold. The ETF offers exposure to the medical devices industry.

The iShares U.S. Medical Devices ETF (IHI) offers investors exposure to the robust medical devices industry, which is projected to grow at a 6.8% CAGR between 2025 and 2032 [1]. The ETF tracks the Dow Jones U.S. Select Medical Equipment Index, providing access to 47 U.S.-based companies, with a strong concentration on industry leaders. Top holdings include Abbott Laboratories (ABT), Intuitive Surgical (ISRG), and Boston Scientific (BSX), all of which are established leaders with innovative products [2].

The medical devices industry is fueled by demographic trends and technological advancements. The aging U.S. population is expected to grow from 58 million in 2022 to 82 million by 2050, increasing demand for medical devices [1]. Additionally, innovations such as AI, IoT, and 3D printing are driving growth and opening new markets [2].

Despite the promising trends, IHI's valuation is currently high. The ETF has a P/E ratio of 31.04x and a P/B ratio of 4.62x, indicating that the market has already priced in strong growth [2]. Given these metrics, investors with long-term objectives may want to monitor IHI for potential purchase opportunities once valuation metrics drop. For now, the ETF is rated as a hold due to its high valuation.

Investors should be aware of the risks associated with the medical devices industry, including regulatory scrutiny, competition, and economic downturns. However, IHI's positioning allows it to benefit from industry leaders' growth while mitigating some of these risks [2].

References:
[1] https://finance.yahoo.com/research-hub/screener/sec-ind_sec-top-etfs_healthcare/
[2] https://seekingalpha.com/article/4799602-ihi-etf-strong-industry-trends-but-valuation-too-high