Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Intuitive Surgical: Cutting Edge Healthcare Stock For The Long Term

By MarketBeat.com (Sean Sechler )Stock MarketsSep 02, 2020 07:22AM ET
www.investing.com/analysis/intuitive-surgical-nasdaqisrg-stock-a-buy-cuttingedge-medical-tech-200536113
Intuitive Surgical: Cutting Edge Healthcare Stock For The Long Term
By MarketBeat.com (Sean Sechler )   |  Sep 02, 2020 07:22AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Did you know that healthcare spending makes up more than 10% of the GDP in most developed countries? In the United States, the spending is near twice that amount and accounted for 17.7% of GDP in 2018.

With a global pandemic bringing the healthcare industry front and center, it’s easy to see the potential for companies that are innovating in the medical world. The huge amount of spending is only going to increase in the coming years, which is why investors might want to look at adding stocks in the healthcare industry going forward.

For example, Intuitive Surgical (NASDAQ:ISRG) is a company producing cutting-edge medical technology that is changing the way that surgeries are performed. Here are some reasons why this stock could be a great buy for long-term investors.

Benefits of Robotic Surgery

Intuitive Surgical is a MedTech company that has been a true pioneer in the robotic-assisted minimally invasive surgery field. Although it might seem strange to consider putting your life in the hands of robotics, this is likely going to be the norm for surgeries as the years go by. There are several reasons why robotic surgery is so groundbreaking. Patients can expect more accurate surgery, significantly less pain, lower risk of infection and blood loss, less scarring, shorter recovery, and better clinical outcomes for many cases. That’s why Intuitive Surgical is such a compelling company.

The company’s cutting-edge da Vinci Surgical Systems allow surgeons to perform robotic-assisted minimally invasive surgeries with greater precision thanks to advanced robotics and computerized visualization technology. The system uses tiny wristed instruments that move like a human hand with a better range of motion along with highly magnified 3D high-definition views of the surgical area. Intuitive Surgical has already sold over 5,550 da Vinci robotic systems that have assisted with more than 7 million surgeries to date, and there’s a strong possibility that number increases substantially over the next decade.

The Next Big Thing in Medical Technology

One of the big reasons why Intuitive is worth a look for your portfolio is due to the massive growth prospects of medical technology over the next few years. We alluded to the huge healthcare spend that occurs worldwide earlier in this article, but the market for surgical robots specifically is expected to grow from $6.7 billion in 2020 to $11.8 billion by 2025. That’s a CAGR of 12.1% that could directly benefit Intuitive Surgical since it has already established competitive and technological dominance in the market.

Although there could be competitors in the future, investors should understand that there is a high cost of switching robotic surgery platforms. That means this company could have loyal customers for years to come. The da Vinci systems are certainly not cheap, with the average selling price excluding operating leases and lease buyouts in 2019 coming in at $1.52 million. The high price tag means strong sales revenue for the company as more hospitals explore robotics, but Intuitive also has a leasing program that allows hospitals to obtain the platform without paying the entire price upfront. This is a smart move for the company, as it can lead to more sales and recurring revenue streams as the industry continues to grow.

Pandemic Impacts

We know that Intuitive Surgical has a compelling business model and a cutting-edge product, but investors should understand that COVID-19 is hitting the company’s earnings hard. A lot of this has to do with a sharp decline in elective procedures. The company generates revenue from the sale of its instruments along with accessories used in every surgical procedure. There was a 19% year-over-year decrease in the amount of worldwide da Vinci procedures in Q2, which was a leading driver of a 22% year-over-year revenue decrease in Q2.

That said, we should be seeing an uptick in elective procedures in the coming months as the pandemic starts to subside. Although Q2 was not a strong quarter for the company at all, its shares have risen over 12% since the earnings report was released. That tells us that the market is pricing in a sharp recovery for the company’s revenue, but keep in mind that there are some near term risks related to elective procedure volumes and financial pressures on hospitals.

The Bottom Line

This is a cutting-edge company that is completely changing the way that many surgeries are performed. It’s innovative medical technology and competitive dominance in a growing market make it worth a look for your portfolio. Keep an eye out for any significant dips if you are interested in adding shares, as the stock is likely due for a pullback soon.

Intuitive Surgical: Cutting Edge Healthcare Stock For The Long Term
 

Related Articles

Gary S. Morrow
Jets Are Lifting By Gary S. Morrow - May 14, 2021

We sure like this Alaska Air Group (NYSE:ALK) chart. There is solid footing underneath ($63.65). The daily MACD is back to neutral despite shares trading fairly close to the 2021...

Intuitive Surgical: Cutting Edge Healthcare Stock For The Long Term

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email