So, with current market conditions, which of these companies present strong investment opportunities?
Intuitive Surgical, Inc. (NASDAQ:ISRG)’s top line is projected to rise from 2012’s $2.17 billion to 2015’s expected $3.19 billion, representing consistent 12.5%-15% year-over-year growth. Net income for the company is anticipated to rise from $357 million in 2012 to the anticipated $937 million by 2015, representing 35%-40% growth annually.
Presently, the company holds a price to earnings ratio of 24.76 and does not pay out a dividend. In total, Intuitive Surgical, Inc. (NASDAQ:ISRG) earns 4 out of 5 stars, and is an attractive investment only if the company affirms investors that double digit growth will be reinstated despite the rough quarter.
Becton, Dickinson and Co. (NYSE:BDX)’s top line growth is predicted to sustain in the 2.5%-5% range annually through 2015, with revenue increasing from 2012’s $7.71 billion to $8.69 billion by 2015. The bottom line for the company is expected to grow in the 2.5%-5% range annually through 2015, with net income rising from 2012’s $1.16 billion to 2015’s anticipated $1.29 billion.
The company presently holds a price to earnings ratio of 17.64 and pays out a dividend yielding 2.00%. Overall, BD earns 3 out of 5 stars and is a strong and stable investment possessing consistent and proven slow-paced growth.
Medtronic, Inc. (NYSE:MDT)’s top line is projected to rise from 2012’s $16.59 billion to 2015’s expected $18.04 billion, representing consistent 2%-3% year-over-year growth. Net income for the company is anticipated to rise from $3.47 billion in 2012 to the anticipated $4.23 billion by 2015, representing 5%-7.5% growth annually.
Presently, the company holds a price to earnings ratio of 15.68 and pays out a dividend yielding 2.11%. In total, Medtronic earns 3 out of 5 stars and is an attractive investment for an investor looking for stability and stable slow-paced growth.
Baxter International Inc. (NYSE:BAX)’s top line growth is predicted to sustain in the 7%-8% range annually through 2015, with revenue increasing from 2012’s $14.19 billion to $17.77 billion by 2015. The bottom line for the company is expected to grow in the 9%-10% range annually through 2015, with net income rising from 2012’s $2.33 billion to 2015’s anticipated $3.05 billion.
The company presently holds a price to earnings ratio of 17.23 and pays out a dividend yielding 2.75%. Overall, Baxter earns 4 out of 5 stars and is a solid company producing steady growth that is trading at reasonable valuation currently.
The Foolish bottom line
Intuitive Surgical, Inc. (NASDAQ:ISRG)’s warning regarding its looming earnings report spooked investors, and the reasoning behind the disappointing results unveiled an apparent weakness in hospital spending, a trend that effects all medical device companies. However, due to the extreme high cost of the da Vinci system, Intuitive Surgical, Inc. (NASDAQ:ISRG) is of particular concern, especially because of the recent speculation that has circled around the effectiveness of the machine. However, uncertainty in the sector should fade as the health-care overhaul law fully takes effects and adjustments are made, and therefore the reaction may be overdone, presenting an opportunity to invest in the strongest of the industry.
The article Is This Gloomy Warning a Telltale Sign for the Medical Devices Industry? originally appeared on Fool.com.
Ryan Guenette has no position in any stocks mentioned. The Motley Fool recommends Becton Dickinson and (NYSE:BDX) Intuitive Surgical. The Motley Fool owns shares of Intuitive Surgical and Medtronic. Ryan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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