As digital transformation accelerates in healthcare, the adoption of artificial intelligence is on the rise, driven by advanced technologies, clinical research innovations, and demand for personalized care.
Leading the charge in AI-driven healthcare innovation, IIntuitive Surgical, Inc. (ISRG), Illumina, Inc. (ILMN), and Teladoc Health, Inc. (TDOC) are revolutionizing the industry with cutting-edge technologies that promise to reshape patient care and medical precision. So investors could scoop up the stocks to reap the benefits.
The healthcare industry's growing reliance on digital technology is accelerating global adoption of AI, enhancing patient care and reducing costs. This growth is fueled by factors such as rising chronic illnesses, an aging population, and the demand for personalized medicine. The global AI in healthcare market is projected to grow to approximately $355.78 billion by 2032, indicating a robust CAGR of 37.7%.
Additionally, AI and machine learning are being integrated to improve patient outcomes and enable early diagnosis, especially for neurodegenerative diseases. Advances in AI processing power have further propelled the use of algorithms in healthcare.
Considering these conducive trends, let’s examine the healthcare stocks in detail.
Intuitive Surgical, Inc. (ISRG)
ISRG develops innovative minimally invasive surgical and diagnostic systems, including the da Vinci Surgical System and Ion endoluminal system. Supporting global healthcare providers, the company offers advanced instrumentation, comprehensive training, and robust service infrastructure for enhanced surgical performance and patient care.
During the fiscal third quarter that ended September 30, 2024, ISRG’s total revenue increased 17% year-over-year to $2.04 billion. In addition, the company’s non-GAAP net income and EPS came in at $669.10 million and $1.84 per share, up 27.7% and 26% over the prior-year quarter, respectively.
Analysts expect ISRG’s EPS and revenue for the fourth quarter, ending in December 2024, to increase 9.5% and 14.1% year-over-year to $1.75 and $2.20 billion, respectively. It surpassed the Street EPS and revenue estimates in each of the trailing four quarters, which is promising.
Over the past year, the stock has gained 84.1% to close the last trading session at $507.42. It soared 51.3% year-to-date.
ISRG’s POWR Ratings reflect its robust outlook. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
ISRG has an A grade in Sentiment. It is ranked #72 out of 138 stocks in the Medical - Devices & Equipment industry.
Beyond what we have stated above, we have also given ISRG grades for Growth, Stability, Value, Momentum, and Quality. Get all the ISRG’s ratings here.
Illumina, Inc. (ILMN)
ILMN delivers advanced sequencing and array-based solutions for genetic and genomic analysis worldwide. Through its Core Illumina and GRAIL segments, it offers a range of instruments, consumables, and services, including whole-genome and targeted sequencing, noninvasive prenatal testing, and the Galleri multi-cancer early detection test.
On August 27, 2024, ILMN received FDA approval for its TruSight™ Oncology (TSO) Comprehensive test, along with companion diagnostics for targeted therapies. This test analyzes over 500 genes to identify biomarkers in solid tumors, potentially benefiting patients with NTRK gene fusions and RET fusion-positive NSCLC.
In the fiscal third quarter ended on September 29, 2024, ILMN’s total revenues amounted to $1.08 billion. Its non-GAAP operating margin went up 22.6% from the year-ago value of 8.3%. Moreover, its EPS stood at $4.42 compared to a loss of $4.77 in the prior-year quarter.
Street expects ILMN’s EPS for the fourth quarter of 2024, ending on December 31, 2024, to increase 561.6% year-over-year to $0.93. It surpassed the consensus revenue estimates in all of the trailing four quarters.
The stock climbed 35.3% year-to-date and 9.6% over the past year to close the last trading session at $152.76.
ILMN’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
It has a B grade for Growth, Sentiment, and Quality. It is ranked #32 out of 328 stocks in the Biotech industry.
To access ILMN’s Stability, Momentum, and Value ratings, click here.
Teladoc Health, Inc. (TDOC)
Teladoc Health, Inc. delivers comprehensive virtual healthcare services globally through its Teladoc Health Integrated Care and BetterHelp segments. It offers a wide range of virtual medical services, chronic condition management, and mental health support, including online counseling via its Teladoc, Livongo, and BetterHelp brands.
TDOC’s revenue was $640.51 million in the third quarter, which ended on September 30, 2024. The non-GAAP gross margin was 71.9%, and the cash flow from operations improved 4.4% from the year-ago value to $110.20 million.
Street expects TDOC’s revenue to amount to $2.57 billion in the fiscal year ending December 2024. It surpassed the consensus EPS estimates in each of the trailing four quarters.
TDOC’s bright prospects are apparent in its POWR Ratings. It has a B grade for Value. Within the Medical - Services industry, it is ranked #35 out of 62 stocks.
Click here to see TDOC’s ratings for Growth, Stability, Sentiment, Momentum, and Quality.
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ISRG shares were trading at $516.49 per share on Tuesday afternoon, up $9.07 (+1.79%). Year-to-date, ISRG has gained 53.10%, versus a 22.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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