/AI%20(artificial%20intelligence)/shutterstock_2330131185.jpg)
Artificial intelligence (AI) is transforming almost every industry, including healthcare and biotech. AI's ability to analyze massive amounts of data quickly and accurately is driving significant advances in medical research, diagnosis, drug discovery and development, personalized medicine, and biomanufacturing.
With AI advancements in healthcare and biotech, Intuitive Surgical (ISRG) and Recursion Pharmaceuticals (RXRX) have outstanding long-term prospects.
#1. Intuitive Surgical Stock
Intuitive Surgical (ISRG) has established itself as the market leader in robotic-assisted minimally invasive surgery (MIS). Intuitive, best known for its flagship da Vinci Surgical System, has significantly transformed the MIS landscape by enhancing precision, reducing recovery times, and improving overall patient outcomes.
In just 29 years of operation, Intuitive has already established a lion's share of 79.8% in the robotic surgery market.
Compared to the S&P 500 Index’s ($SPX) gain of 16.9% YTD, Intuitive stock has surged 31.1%.
The da Vinci Surgical System is widely regarded as the gold standard in robotic-assisted surgery, boasting advanced technology and a track record of safety and efficacy. In the first quarter, surgical procedures performed using the da Vinci system increased by 16% year over year. In total, Intuitive installed 8,887 da Vinci systems during the quarter, a 14% increase.
Aside from the sale of these systems, the sale of instruments and accessories used by da Vinci contributes to Intuitive's total revenue, which rose 18% in the quarter to $1.16 billion. Total revenue increased by 11% to $1.89 billion, with adjusted earnings per share (EPS) up 22% to $1.50.
Innovation is central to Intuitive Surgical's growth strategy. The company invests heavily in R&D to create new technologies and improve its current platforms. The company now has CE mark certifications for its da Vinci single-port (SP) surgical system, used for various surgical procedures. It has also received FDA clearance for da Vinci 5, its next-generation multi-port robotic system. During Q1, it introduced eight da Vinci SP systems in Europe and eight da Vinci 5 systems in the United States.
Looking ahead to the full year 2024, analysts forecast Intuitive’s revenue to increase by 12.7% to $8.03 billion. Revenue could further grow by 16.1% to $9.3 billion in 2025.
Additionally, analysts anticipate ISRG's profits to keep increasing by 9.9% to $6.28 per share in 2024 and 17.08% to $7.35 per share in 2025.
Wall Street remains upbeat about this robotic surgical leader's long-term prospects with AI. Overall, ISRG stock is rated a “moderate buy.” Out of the 23 analysts in coverage, 14 recommend "strong buy," two recommend "moderate buy," and seven say "hold," with zero “sell” recommendations.
ISRG has outperformed its average target price of $426. However, the high price target of $500 represents a 13% increase from current levels.
While the short-term gains may not appear appealing, Intuitive has a long way to go. The global robotic surgery market is expected to grow at a compounded annual growth rate of 9.1%, hitting $188.8 billion by 2032. If estimates are correct, Intuitive is expected to hold 52.06% of the market by 2031, making it a compelling growth stock to buy now.
#2. Recursion Pharmaceuticals Stock
Recursion Pharmaceuticals (RXRX) is a clinical-stage biotech company that uses advanced AI and machine learning to expedite drug discovery. Its innovative approach to bringing new therapies to market faster and more efficiently has drawn Wall Street's interest.
RXRX stock has dipped 24.5% YTD, compared to the broader market's gains.
Recursion's AI-driven platform, Recursion Operating System (OS), combines automated cell biology, high-content screening, and machine learning to discover new therapeutic candidates across various disease areas. It has an extensive pipeline in oncology, rare diseases, neuroscience, and inflammation.
During a recent interview with CNBC, Recursion's CEO claimed that their company can reduce the time between drug discovery and commercialization from five to six years to one or two years, while also reducing the cost from hundreds of millions of dollars to $10 million or $20 million. The company plans to accomplish this through the use of AI and machine learning.
Recursion has already begun work on this initiative, and has developed BioHive-2, an AI supercomputer, in collaboration with semiconductor giant Nvidia (NVDA), which invested $50 million in the biotech. Recursion claims that the updated version is better and four times faster than its predecessor, BioHive-1.
This product, when successful, could be extremely beneficial to Recursion in the long run, but investors must be patient until then. Furthermore, the ongoing demand for innovative treatments for both rare and common diseases creates a significant market opportunity for Recursion.
Recursion, as a clinical-stage, evolving biotech company, remains unprofitable. In the first quarter, the company reported a net loss of $91.4 million. So, despite being an excellent biotech company capable of capitalizing on AI, Recursion is currently a risky investment that's most suitable for investors with a high risk appetite.
Overall, on Wall Street, Recursion stock is a "moderate buy.” Of the seven analysts that cover RXRX, one rates it a "strong buy," one suggests a "moderate buy," and five rate it a "hold."
Its average target price of $12.83 suggests a 72.4% upside potential over the next 12 months. Furthermore, its high target price of $17 suggests the stock can rally as much as 128.5% from current levels.
