We recently published a list of 10 Best Medical Stocks to Buy Now. In this article, we are going to take a look at where Intuitive Surgical, Inc. (NASDAQ:ISRG) stands against 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 globally, with a steady 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 biggest in the world, benefiting from trends that arise during crises like the coronavirus pandemic. Following the pandemic’s rapid spread in 2020, investors were eager to identify the best medical stocks to navigate the global healthcare crisis.
This industry is highly capital-intensive and competitive, encompassing various subsectors, including pharmaceutical companies, healthcare plan providers, medical equipment manufacturers, and hospitals. While healthcare plan providers and pharmaceutical firms often capture consumer attention, hospitals tend to be overlooked, despite their status as publicly traded entities. According to McKinsey, the medical industry’s overall profits are projected to grow at a compound annual growth rate (CAGR) of 4%, increasing 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, is forecasted to surge to $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, were among the most sought-after due to their vaccines. On the stock market, Moderna’s shares increased by an astounding 429% between December 2019 and September 2021. This outcome demonstrates that even modest wagers placed at the ideal moment can provide investors from all backgrounds with large returns. During the same period, Pfizer’s stock saw a more moderate 50% gain; nevertheless, the gap in gains is comprehensible given that Pfizer currently has a market value of more than four times that of Moderna, at $155 billion.
Our Methodology
For our methodology, we first sifted through the US pharmaceutical, medical devices, and healthcare ETFs and selected stocks that were weighted the highest. 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 the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every 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 that specializes in robotic-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 increasing adoption of AI-driven Da Vinci systems has significantly boosted Intuitive’s financial performance. In 2023, Intuitive Surgical, Inc. (NASDAQ:ISRG) recorded a 14% revenue increase, with 1,370 systems installed globally, reflecting an 8% year-over-year growth. System sales in Q4 reached $480 million, highlighting strong demand. The volume of procedures using these systems surged by 21%, contributing to a 17% rise in quarterly revenue, which totaled $1.93 billion. Operating income also saw a 20% jump, indicating the growing use of its AI-powered surgical technology.
Intuitive Surgical, Inc. (NASDAQ:ISRG) reported $2.01 billion in revenue for Q2 2024, a 14% year-over-year increase. This growth was driven by a 17% rise 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 & Accessories segment, making up nearly 60% of total revenue, grew by 16% to $1.24 billion.
As of Q2 2024, 67 hedge funds tracked by Insider Monkey held stakes in the stock with Fisher Asset Management being the largest stakeholder with shares worth $2,089,093,098. The stock also holds a Moderate Buy rating. In the past 3 months, 18 Wall Street analysts set a 12-month price target for Intuitive Surgical, with an average of $490.06.
Overall, ISRG ranks 8th on our list of best medical stocks to buy now. While we acknowledge the potential of ISRG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ISRG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.