Identifying a company that can be a leader in its field for years to come is one of the rules to successful investing. And when you make an investment in a company just before its stock skyrockets, it's an amazing feeling. This is what long-term investors of leading robotic surgical innovator Intuitive Surgical (ISRG -0.41%) experienced over the past five years. Let's take a look at how the company got to that point, what caught investors' attention, and what the future holds.
Image Source: Intuitive Surgical
A 413% stock price increase in just five years
Intuitive Surgical is no crypto explosion, but it does represent a solid investment built on solid rules:
- Its innovative products lead the market.
- Executive leadership is led by 25-year company veteran and current CEO Gary Guthart.
- The company specializes in a market expected to grow at a 21.4% compound annual growth rate through 2028.
Intuitive's hugely successful robotic surgery platform, da Vinci, continues to expand in the instrumentation supported by the platform, and its number of systems shipped continues to rise. In its preliminary release of fourth-quarter results the company shipped 18% more systems than in the same quarter the previous year, and for the full year it saw an increase of 44% over 2020.
A $10,000 investment in mid-January 2017 would be worth over $41,000 as of Jan. 18, 2022, following an excellent 317% increase. Since its low point at the start of the COVID-19 pandemic on March 23, 2020, Intuitive's stock has climbed roughly 150%. Keep in mind this was during a time when many surgical procedures were being rescheduled due to the fear of doctor visits and overcrowding of surgical centers due to the pandemic.
How Intuitive stacks up against the competition
The growing popularity of robotically assisted surgery, combined with the success of Intuitive's da Vinci in a vast array of surgical procedures including gynecological, urological, head and neck, thoracic, colorectal, and cardiac has allowed it to shine under operating room lights.
A look at the chart below shows how Intuitive's stock price stacks up over the past five years by comparison against the S&P 500 and Intuitive's top competitor -- in terms of market cap, revenue, valuation, and net income -- Medtronic, as well as against Stryker -- a top 10 robotic surgery company ranked #2 behind Intuitive by Idata Research.
Medtronic boasts its own robotic surgery platform, Hugo, but is playing catch-up in the market after manufacturing and supply chain delays, hoping for an FDA approval this year. Stryker has an established system called Mako, focused primarily on joint surgery such as knee and hip replacements.
As you can see below, from a stock price perspective there's Intuitive, and then the rest. I'm also not too concerned with the recent pullback. The impact of the COVID-19 omicron variant should eventually fade, and elective surgeries will pick up once again, making the dip a buying opportunity.
da Vinci's success clears the way for newer developments
Intuitive's investors have more reasons to get excited about the next five years, including new developments in robotic surgery for the company. The fairly new Ion endoluminal platform is designed to go beyond the boundaries of da Vinci, enabling surgeons to perform biopsy procedures within the lungs. Ion received FDA approval in 2019 and is now being purchased by hospitals and surgical centers across the U.S. Watch for more on its sales figures in the company's official Q4 results to be released around on Jan. 20, followed by its Q1 results around April 20.
U.S. doctors perform approximately 75,000 lung biopsies each year -- a $3.5 billion market expected to grow at a compound annual growth rate of 6.2% through 2027. Although Intuitive Surgical will have to fight for market share amid increasing competition from Medtronic and next-generation surgical robotics company Vicarious Surgical -- partially backed by Bill Gates -- only 10% of all current surgical procedures are done using robotic-assisted systems. That leaves a great deal of room for revenue and expansion growth for companies such as Intuitive, with products in place and an established network to sell into for years to come.
