10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America

3. Intuitive Surgical Inc (NASDAQ:ISRG)

Number of Hedge Fund Investors: 79

While Intuitive Surgical Inc (NASDAQ:ISRG) valuation has concerned many, Bank of America called the robotic surgery-focused Intuitive Surgical Inc (NASDAQ:ISRG) a best of breed stock for the third quarter in a latest report. Intuitive Surgical Inc (NASDAQ:ISRG) bulls believe the stock is poised for long-term growth as robots will play a key role in surgeries and the broader healthcare industry in the coming years. During the first quarter, Intuitive Surgical Inc (NASDAQ:ISRG) procedure volume, which shows the number of surgical procedures carried out by Intuitive Surgical Inc (NASDAQ:ISRG) robots, jumped 16% year over year, coming in at the higher end of its estimates. Revenue in the quarter jumped about 12% to $1.89 billion, beating expectations by $20 million. Intuitive’s efforts to come out of the COVID-induced slowdown are working. Its revenue has grown at a 17.8% CAGR after the pandemic, compared with the pre-pandemic revenue CAGR of 18.3%.

There are about 8,600 da Vinci systems (Intuitive Surgical’s robot) installed at healthcare facilities across the globe. Some estimates suggest the robotic surgery market is expected to grow at a CAGR of 11% through fiscal 2026. With a close to 70% market share, Intuitive Surigical is positioned well to benefit from this organic growth. Wall Street expects Intuitive Surgical Inc (NASDAQ:ISRG) earnings to grow 17% next year and at 12.6% over the following five years on a per-annum basis.

Baron Health Care Fund stated the following regarding Intuitive Surgical, Inc. (NASDAQ:ISRG) in its first quarter 2024 investor letter:

“Intuitive Surgical, Inc. (NASDAQ:ISRG) sells the da Vinci surgical robotic system for minimally invasive surgical procedures. The stock rose after the company announced the planned launch of the da Vinci 5, its next-generation, multiport robotic system. The new system has 10,000 times the computing power of its predecessor and features over 150 design upgrades such as force feedback, improved visualization, and productivity enhancements. Intuitive plans to launch the device at a small number of customers in the U.S. before releasing it more broadly. We think the da Vinci 5 will enable Intuitive to continue to generate strong revenue and earnings growth and maintain its competitive edge.”