We recently published a list of 10 Best Medical Stocks to Buy Now. In this article, we’ll take a look at where Intuitive Surgical, Inc. (NASDAQ: ISRG) stacks up to other best medical stocks to buy now.
Navigating the Healthcare Landscape: Investment Opportunities and Growth Trends
The medical and healthcare industry is one of the largest in the world, with constant demand for products and services due to the biological nature of humans. Stocks like Pfizer Inc. (NYSE:PFE) and Tenet Healthcare Corporation (NYSE:THC) are among the world’s largest, benefiting from trends that arise during crises like the coronavirus pandemic. Following the rapid spread of the pandemic in 2020, investors were eager to identify the best medical stocks to address the global healthcare crisis.
This industry is very capital-intensive and competitive, encompassing various subsectors including pharmaceutical companies, health plan providers, medical equipment manufacturers, and hospitals. While healthcare providers and pharmaceutical companies often capture consumers’ attention, hospitals tend to be overlooked, despite their status as publicly traded entities. According to McKinsey, overall medical industry profits are expected to grow at a compound annual growth rate (CAGR) of 4%, from $654 billion in 2021 to $790 billion by 2026. Notably, the hospital sector is expected to grow at a remarkable CAGR of 12.5%, reaching $2 trillion by 2028. Similarly, the pharmaceutical manufacturing segment, valued at $358 billion in 2020, expected to reach $1.2 trillion. by 2030, reflecting a CAGR of 13%.
Over time, medical companies such as Pfizer and Moderna, Inc. (NASDAQ: MRNA), a biotechnology company based in Cambridge, Massachusetts, have been among the most sought after due to their vaccines. On the stock market, Moderna shares have risen staggeringly 429% between December 2019 and September 2021. This result demonstrates that even modest bets placed at the ideal time can offer investors of all backgrounds significant returns. During the same period, Pfizer stock posted a more moderate gain of 50%; Nonetheless, the earnings gap is understandable given that Pfizer currently has a market value more than four times that of Moderna’s, at $155 billion.
Our methodology
For our methodology, we first screened U.S. pharmaceutical, medical device, and healthcare ETFs and selected the highest weighted stocks. After choosing these stocks, we ranked them based on their total number of hedge fund holders as of Q2 2024.
“Why are we interested in stocks that hedge funds are piling into? The reason is simple: our research has shown that we can outperform the market by imitating the stocks selected by the best hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).”
A medical team performing minimally invasive surgery with a da Vinci surgical system.
Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of hedge fund holders: 67
Intuitive Surgical, Inc. (NASDAQ: ISRG) is a pioneering biotechnology company specializing in robot-assisted surgical systems, primarily known for its flagship product, the da Vinci Surgical System. At its core, Intuitive develops, manufactures and markets robotic products designed to improve clinical outcomes through minimally invasive surgery.
The growing adoption of AI-based Da Vinci systems has significantly improved Intuitive’s financial performance. In 2023, Intuitive Surgical, Inc. (NASDAQ: ISRG) reported a 14% revenue increase, with 1,370 systems installed worldwide, reflecting 8% year-over-year growth. ‘other. Fourth-quarter system sales reached $480 million, highlighting strong demand. The volume of procedures using these systems jumped 21%, contributing to a 17% increase in quarterly revenue to $1.93 billion. Operating profit also saw a 20% increase, indicating the growing use of its AI-based surgical technology.
Intuitive Surgical, Inc. (NASDAQ: ISRG) reported revenue of $2.01 billion for the second quarter of 2024, an increase of 14% year-over-year. This growth was driven by a 17% increase in da Vinci procedures, 341 system placements, including 70 units of the new da Vinci 5 platform, and a 14% expansion of its global installed base to 9,203 systems. The Instruments and Accessories segment, which accounts for nearly 60% of total revenue, grew 16% to $1.24 billion.
As of the second quarter of 2024, 67 hedge funds tracked by Insider Monkey held stakes in the stock with Fisher Asset Management being the largest shareholder with shares worth $2,089,093,098. The stock also holds a Moderate Buy rating. Over the past three months, 18 Wall Street analysts have set a 12-month price target for Intuitive Surgical, with an average of $490.06.
Overall, the ISRG ranks 8th on our list of the best medical stocks to buy now. While we recognize the potential of ISRG as an investment, our belief lies in the belief that AI stocks hold more promise in terms of higher returns in a shorter time frame. If you’re looking for an AI stock that’s more promising than ISRG but trades at less than 5x earnings, check out our report on cheapest AI stock.
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Disclosure: None. This article was originally published on Initiated Monkey.