According to a McKinsey Global Institute report, by 2030, one-third of American jobs could become automated because a technology-driven world will continue to substitute human work activities with robots and AI (artificial intelligence)-powered technologies. The COVID-19 pandemic has resulted in unexpected innovations in automation, with the rapid deployment of robotic technology in the healthcare system. Because the healthcare sector plans to be ready if/when the next pandemic hits, its demand for robot-assisted healthcare technologies should accelerate.
The global healthcare robotics market is expected to grow at a 21.5% CAGR over the next five years to hit approximately $11 billion by 2026. Many hospitals worldwide are currently using robots to support staff and patients. The growing need for automation and rapid technological advancements to cure patients should further drive the industry’s growth.
Against this backdrop, we think one should consider buying the dip in Intuitive Surgical, Inc. (ISRG), Boston Scientific Corporation (BSX), and Integra LifeSciences Holdings Corporation (IART). These robotics companies are well positioned to see sustained demand for their products.
Click here to checkout our Healthcare Sector Report for 2021
Intuitive Surgical, Inc. (ISRG)
Founded in 1995, ISRG is a global technology leader in robotic assisted, minimally invasive surgery. The company develops, manufactures and markets the da Vinci surgical system that includes surgeon's consoles, patient-side carts, 3-D HD vision systems, skills simulators, etc., along with EndoWrist instruments, such as forceps, scissors, electrocautery tools, scalpels, etc.
In the first quarter, ended March 31, 2021, ISRG’s revenue increased 18% year-over-year to $1.29 billion, while its non-GAAP income from operations increased 37.2% from its year-ago value to $527 million. The company reported $427 million in non-GAAP net income, representing a 32.2% increase year-over-year. Its EPS increased 30.4% year-over-year to $3.52.
Analysts expect ISRG’s revenue for the current quarter, ending June 30, 2021, to be $1.26 billion, representing 48.3% year-over-year growth. The company’s EPS is likely to increase 175.7% year-over-year to $3.06 for the same period.
ISRG’s stock has gained 41.7% over the past year and closed yesterday’s trading session at $821.54. It is currently trading 8.1% below its $893.79, 52-week high.
ISRG’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. ISRG has a B grade for Sentiment, Quality and Growth. Among the 181 stocks in the Medical - Devices & Equipment industry , it is ranked #53.
Click here to see the additional POWR Ratings for ISRG (Stability, Value and Momentum).
Boston Scientific Corporation (BSX)
BSX deals in three kinds of businesses: Rhythm and Neuro; Cardiovascular; and MedSurg. It is the leader in global interventional cardiology and offers drug-eluting coronary stent products such as SYNERGY Everolimus-Eluting Platinum Chromium Coronary Stent System and Promus ELITE.
In March, BSX entered an agreement with an affiliate of Baring Private Equity Asia to acquire the global surgical business of Lumenis LTD., a privately held company that operates in energy-based medical solutions. This acquisition should expand the company’s global footprint throughout Europe and Asia.
In the first quarter, ended March 31, 2021, BSX’s net sales increased 8.3% year-over-year to $2.75 billion. Its adjusted free cash flow increased by 85.3% from its year-ago value to $404 million, while its adjusted operating margin grew by 270 bps year-over-year to 24.3%. The company’s operating income increased 153.4% year-over-year to $370 million.
Analysts expect BSX’s revenue for the current quarter, ending June 30, 2021, to be $2.94 billion, representing 46.7% year-over-year growth. The company’s EPS is likely to increase 362.5% year-over-year to $0.37.
Over the past year, BSX has gained 10.8%. It closed yesterday’s trading session at $41.61 and is currently trading 6.8% below its 52-week high of $44.63.
It is no surprise that BSX has an overall B grade, which equates to Buy in our proprietary ratings system. It has an A grade for Growth and a B grade for Sentiment and Stability. Of 181 stocks in the Medical - Devices & Equipment industry, it is ranked #41.
In total, we rate BSX on eight different levels. Beyond what we’ve stated above, we have also given BSX grades for Quality, Value and Momentum. Get all the BSX ratings here.
Integra LifeSciences Holdings Corporation (IART)
IART is a leading global medical technology company that provides innovative solutions in orthopedics, neurosurgery, reconstructive and general surgery. Its product offerings include devices and implants for foot and ankle, hand and wrist, instruments and systems used in neurosurgery, and other surgical instruments. Among its leading brands are AmnioExcel, Bactiseal, Cerebroflo, Certas Plus, Codman, etc.
In January, IART acquired ACell Inc. and its proprietary MatriStem UBM technologies to innovate technological solutions and cater to customers’ most clinical challenges. The acquisition should lead to further development of the company’s services and enhance its brand value.
During the first quarter, ended March 31, 2021, IART’s gross profit increased 1.6% year-over-year to $360.1 million, while its adjusted EBITDA increased 18.8% year-over-year to $89.9 million. Its adjusted net income rose 42.9% from the year-ago value to $59 million. And the company’s EPS increased 43.8% from its year-ago value to $0.69.
IART is expected to see 45.5% revenue growth year-over-year to $376.34 million for the current quarter, ending June 30, 2021. Its EPS is estimated to increase 100% from the year-ago value to $0.66 for the same period.
Over the past year, IART’s stock has gained 25.7%. The stock closed yesterday’s trading session at $66.79 and is currently trading 13.7% below its 52-week high of $77.40.
IART’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. IART has an A grade for Growth, and a B grade for Value and Stability. Among the 181 stocks in the Medical - Devices & Equipment industry, it is ranked #6.
You can click here to see the additional POWR Ratings for IART (Momentum, Sentiment and Quality).
Click here to checkout our Healthcare Sector Report for 2021
ISRG shares were trading at $816.08 per share on Thursday morning, down $5.46 (-0.66%). Year-to-date, ISRG has declined -0.25%, versus a 12.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Samiksha Agarwal
Samiksha Agarwal has always had a keen interest in financial markets. This has led her to a career as a financial journalist. Through her extensive knowledge of fundamental analysis, her goal is to help investors identify untapped investment opportunities in the stock market.
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