Despite the concerns over the struggles of politicians to craft a new health care plan for the United States, the health care sector, and many of its subsectors, have had an outstanding first half to 2017. That comes as no surprise to some on Wall Street as the sector faced some bitter political rhetoric during the campaign season last year and was clearly out of favor. Medical technology had a second strong quarter in a row, up a stunning 13.2%, versus 5.5% for the S&P 500.

A new report from the medical technology team at RBC warns that the premium in the group has jumped considerably due to the strong performance, and the top companies need to beat guidance and consensus to continue their solid runs. The analysts noted this in their recent report:

While the MedTech index was trading at a 5% discount to S&P 500 at the start of the year, it now trades at a 5% premium, a 10-percentage point swing in the space of six months. The premium peaked in early July 2016, before the second quarter 2016 reporting season started, and then nose-dived in the next six months. MedTech needs support from a strong earnings season to avoid a similar outcome this year.

The RBC analysts do remain very positive on three top companies that they feel have the ability to beat earnings estimates and raise guidance going forward. All three are rated Outperform.

Boston Scientific

This top medtech company has remained on a slow and steady grind higher over the past five years. Boston Scientific Corp. (NYSE: BSX) develops, manufactures and markets medical devices that are used in interventional cardiology, peripheral interventions, vascular surgery, electrophysiology, neurovascular interventional, oncology, endoscopy, urology, gynecology and neuromodulation.

The analysts noted in their report that the company is a benefactor of the weakening U.S. dollar, and despite the company tapping the brakes on slower revenue growth, they remain positive. The report also said this:

Boston Scientific needs to beat second quarter earnings-per-share guidance and raise full year forecast for the stock to move higher near-term. The company’s shares rose 28.2% in the first half of 2017, and were the third best-performing large-Cap MedTech stock we track. Longer-term, we believe the shares can touch $40 by the end of the decade.

The RBC price target for the stock is set at $31, and the Wall Street consensus price objective is $30.39. The stock closed trading on Monday at $27.56 per share.

Edwards Lifesciences

This company pioneered the artificial heart valve, and it could be poised for big growth. Edwards Lifesciences Corp. (NYSE: EW) provides products and technologies to treat structural heart disease and critically ill patients worldwide. The company offers transcatheter heart valve therapy products, comprising transcatheter aortic heart valves and their delivery systems for the nonsurgical replacement of heart valves.

The company also provides surgical heart valve therapy products, such as pericardial valves for aortic and mitral replacement, and minimally invasive aortic heart valve system, as well as tissue heart valves and repair products, which are used to replace or repair a patient’s diseased or defective heart valve.

Top Wall Street analysts feel that the company’s acquisition of privately held CardiAQ last year made good sense going forward. CardiAQ has human implants of transcatheter mitrial valves, and Edwards is focused on the mitrial valve opportunity after its very strong success in aortic valves. The company also has had tremendous success with transcatheter valve replacement. Transcatheter heart valve replacements are rapidly gaining favor in the medical community for use in those patients who are deemed unsuited for open heart surgery, and they are a fast growing revenue stream for the company.

The RBC report said about Edwards Lifesciences:

Following a strong first quarter 2017 print, the company narrowed revenue guidance toward the high end and increased earnings-per-share guidance. They now forecast 2017 revenues of $3.2-$3.4 billion, raising the low end of the guidance by $200 million. Non-GAAP EPS guidance is in the range of $3.43 to $3.55. If our assessment of the Trans-catheter Aortic Valve Replacement market is correct, we believe they will raise guidance again after second quarter results. Worldwide revenues of $3.3 billion and EPS of $3.50 will likely be the new lower bounds of updated 2017 guidance. Our revenue and EPS estimates are $3.33 billion and $3.50, while consensus is $3.35 billion and $3.54.

RBC raised its price target to $124. The posted consensus target is $122.39, and the stock closed most recently at $117.53 per share.

Zimmer Biomet

Wall Street has been positive on this huge 2015 merger from the get-go. Zimmer Biomet Holdings Inc. (NYSE: ZBH) is a global leader in musculoskeletal health care. The company designs, manufactures and markets orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, cranio maxillofacial and thoracic products; dental implants; and related surgical products.

While the RBC analysts feel this may be a longer term play, they like it into the earnings and noted in their report:

The stock Currently trades at a ~24% forward P/E discount to its large-cap Medtech peers. While there is still risk of future supply-related hiccups as Zimmer Biomet completes its root cause/action plans and transitions into its action implementation for various form 483 observations, we believe the valuation, which now sits near 10-year lows on a P/E basis, and is compelling enough to assume this risk. We continue to recommend longer-term, value focused investors buy at current levels.

Shareholders of Zimmer Biomet are paid a 0.76% dividend. The $140 RBC price target compares with the consensus target of $133.57. The shares closed on Monday at $127.40.

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These three top medtech stocks to buy have a stellar long-term outlook. The aging of the U.S. and world population is another significant factor in the prospects for these companies. It may be wise to purchase one-half positions prior to earnings, just in case there is a slip up, as all these stocks have been red hot in 2017.

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