Intuitive Surgical Inc (NASDAQ:ISRG) will be reporting its Q4 earnings later this month, on Jan. 24. Given its position on the blurry line between a tech company and a medical device company, the big tech selloff didn’t hit it as hard as it hit other tech firms.
That’s largely because ISRG makes robots that conduct various surgical procedures. Under the name da Vinci Surgical Systems, Intuitive Surgical has been a pioneer in developing robots to conduct minimally invasive surgical procedures.
You can imagine how valuable these types of machines can be both from a hospital’s point of view and from an insurer’s point of view.
A machine doesn’t charge billable hours like a trained surgeon does, which means the hospital doesn’t have to pass that charge on and insurance companies are more willing to allow smaller operations without as much nitpicking.
This is also very helpful for hospitals and outpatient facilities — which more and more health insurers are operating as subsidiaries — because machines don’t need to rest or work odd hours. They’re always available and ready to work within exacting parameters.
This is what has made Intuitive Surgical such a hot stock. ISRG stock is up 160% in the past 3 years, which is more than 50% growth per year. And last year, even after the major selloff, it finished the year up nearly 25%.
And this is precisely what I was saying about the stock being slightly sheltered from the direct tech stock meltdown.
Remember, the major averages ended the year in negative territory. And even its sector peers only averaged a sub-2% return last year. Meanwhile, ISRG is executing on its long-term plan and it’s being rewarded for it. It’s also why it rates an A in my Portfolio Grader.
Opportunities in ISRG Stock
There are a lot of opportunities with ISRG that go beyond simply providing consumers with products. This company is focused on consumers, but not on the retail level. It is driven by powerful, long-term global trends in healthcare. Most industrialized nations’ populations are getting older. That means chronic diseases are becoming more common.
Between new MedTech solutions like ISRG delivers and better diagnostic equipment and biotech solutions, the future of healthcare is treating the graying demographics.
This is precisely why big healthcare insurers are vertically integrating into these types of services. It’s a way to control costs and better manage outcomes — and profits.
And Intuitive Surgical doesn’t simply sell the machines — which are not cheap. It also supplies the equipment that the machines use for surgery and also help maintain the equipment. In this sense, ISRG is like a defense contractor that sells a big ticket plane but then also has proprietary support and maintenance contracts.
What’s more, because the medical industry is very conservative about introducing new technologies, ISRG is building a very effective competitive moat around this business.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.