Citi on October 8 reaffirmed Abbott Laboratories (ABT) and DexCom (DXCM) as its two top picks in the medical technology sector.

Citi believes that internal growth within the medical technology industry is currently divergent, with the continuous glucose monitoring (CGM) business becoming a key factor influencing the valuation and earnings outlook of related companies.

Among them, Abbott's investment opportunity mainly stems from low market expectations and the potential for business growth to reaccelerate, while DexCom demonstrates more clear-cut operating growth momentum through revenue growth, margin improvement, and market share expansion.

Abbott: Market Expectations at a Low Point, CGM Business Recovery Becomes Key

Citi noted that investors currently lack a clear judgment on Abbott's growth prospects, and low market expectations for its third-quarter 2026 results leave room for some businesses to resume growth in 2027.

Abbott's continuous glucose monitoring (CGM) business is the key variable determining its future performance. The business recorded first-quarter sales of US$2 billion, up 7.5% year over year, and management had previously expected growth to return to double-digit levels in the second quarter.

Citi believes that if CGM business growth reaccelerates, combined with currently suppressed valuation levels, Abbott shares could be in line for a re-rating opportunity.

Recently, Abbott raised its full-year adjusted earnings per share guidance. In addition, Rothschild Redburn upgraded Abbott to a "Buy" rating, mainly citing the strong performance of its medical device business.

DexCom: Revenue Growth and Margin Improvement, Continued Market Share Gains

Unlike Abbott, which still needs to wait for business growth to reaccelerate, DexCom has already demonstrated a relatively clear trend of operational improvement.

DexCom shares have risen about 35% year to date, reversing a 14.7% decline for the full year of 2025.

In the second quarter of 2026, DexCom generated revenue of US$1.308 billion, up 13.1% year over year, including 12% organic revenue growth and 19% growth in international business revenue.

With product upgrades, the company's gross margin improved by about 400 basis points, or 4 percentage points.

DexCom is also continuing to expand product coverage for patients with type 2 diabetes and is advancing the market rollout of its next-generation G7 15 Day glucose sensor.

After reporting second-quarter results, the company raised its guidance for a second consecutive quarter, and several investment banks subsequently raised their target prices.

Citi noted that DexCom is one of the companies with the most clear-cut operating growth momentum in the current medical technology sector.

Compared with the slowdown in Abbott's CGM business growth, DexCom is continuing to capture market share through product upgrades, international market expansion, and expanded patient coverage.

Further Divergence Within the Sector: Three Companies Have Upside Catalysts, Boston Scientific Faces Downside Risk

In addition to Abbott and DexCom, Citi is also bullish on the potential upside opportunities for Edwards Lifesciences, Sight Sciences, and Zimmer Biomet.

All three companies have recently reported better-than-expected results or raised their guidance, while each has relatively clear follow-up catalysts, including the release of important clinical trial results, new product launches, and a business recovery expected in 2027.

By contrast, Citi is cautious on Boston Scientific.

Boston Scientific had previously cut its guidance and said that due to the impact of a cyberattack, the company will be unable to meet its original performance targets.

At the same time, its core business is also facing competitive pressure, and the stock has fallen about 50% year to date.

Overall, Citi's investment judgment on the medical technology sector places greater emphasis on companies' own certainty of growth.

Abbott's main highlight lies in its low valuation and the potential recovery of its CGM business, while DexCom has already demonstrated operational advantages through revenue growth, profitability improvement, and market share expansion.

For other medical technology companies, future clinical trial results, product launch progress, and changes in guidance will become important factors affecting stock performance.