Keith Speights (TMFFishBiz), March 31, 2017

For several years, it looked like Intuitive Surgical (NASDAQ:ISRG) might be past its prime. The robotic surgical system maker’s stock experienced a malaise throughout much of the period between 2012 and late 2015.

Now, however, Intuitive Surgical is on a roll. Its share price is up close to 20% so far in 2017. Could the best be yet to come for Intuitive? I think so.

Trends in its favor

Most people think about the aging of the baby boomer generation as a key demographic trend. And it is. However, millennials (individuals born between 1981 and 1997) have surpassed baby boomers as the largest generation in the U.S. The aging of both groups should benefit Intuitive Surgical.

Hysterectomy ranks as the top surgical procedure performed using Intuitive’s da Vinci robotic surgical system. More than 40% of da Vinci procedures performed in the U.S. last year were hysterectomies. The average age of American women who have hysterectomies is 42. Many in the millennial generation will reach this age in only a few years.

Intuitive Surgical’s second most performed surgical procedure is radical prostatectomy for patients diagnosed with prostate cancer. The average age of American men who are diagnosed with prostate cancer is 66. Some baby boomers have already reached the prime age for developing prostate cancer, but most aren’t quite that old yet.

It’s not just demographic trends that are working in Intuitive Surgical’s favor. The company generated 71% of total revenue in 2016 from recurring sales of instruments, accessories, and services. This percentage has steadily increased in recent years. Intuitive’s huge recurring revenue provides it stability and flexibility that many other companies don’t enjoy.

 

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