we believe Intuitive surgical stock (NASDAQ
If we look at stock returns, both ABT and ISRG, with more than 25% down this year, have underperformed the broader S&P 500, down 16%. There’s more to compare, and in the sections below, we discuss why we think ISRG stock will provide better returns than ABT stock in the next three years. We compare a large number of factors, such as historical revenue growth, returns and valuation multiples, in an interactive dashboard analysis of Abbott versus intuitive surgery: Which stock is better? Parts of the analysis are summarized below.
1. Much better intuitive surgery revenue growth
- Intuitive Surgical’s 11.3% revenue growth over the past 12 months is higher than Abbott’s 6.4%.
- Even if we look at a longer time frame, Intuitive Surgical’s sales growth has been better. It increased at an average annual growth rate of 16.2% to $5.7 billion in 2021, compared to $3.7 billion in 2018, while Abbott saw its revenue grow at an average annual rate of 12.4% to $43.1 billion in 2021, Compared to $30.6 billion in 2018.
- Abbott’s sales growth over recent years has been driven by high demand for Covid-19 testing. However, as Covid-19 cases have declined over recent quarters, demand for testing is declining, putting pressure on Abbott’s diagnostics business.
- However, the company’s medical devices and well-established pharmaceutical sales are likely to experience steady growth over the coming years.
- For Intuitive Surgical, revenue growth over the recent past has been driven by a rebound in procedure volume, which was negatively impacted in the initial stages of the pandemic due to shelter-in-place restrictions. The company continues to expand its installed base, driving recurring revenue growth, such as consumables.
- However, the stock has seen a meaningful correction this year, due in part to a difficult macroeconomic environment and the failure of the second quarter. That trend reversed after its upbeat third-quarter results and the company’s announcement of an additional $1 billion worth of share buybacks.
- our Abbott revenue comparison And the Intuitive surgical revenue comparison Dashboards provide more information about companies’ sales.
- Looking ahead, Intuitive Surgical’s revenue is expected to grow faster than Abbott’s revenue over the next three years. The table below summarizes our revenue forecasts for the two companies over the next three years. It indicates a compound annual growth rate of 13.7% for intuitive surgery, compared to a compound annual growth rate of 4.2% for Abbott, based on Trefis Machine Learning analysis.
- Note that we have different methodologies for companies that are negatively affected by Covid and those that are not or positively affected by Covid while forecasting future revenue. For companies that have been negatively impacted by Covid, we consider the quarterly revenue recovery trajectory to predict recovery to pre-Covid revenue run rate. After the recovery point, we apply the average annual growth observed three years prior to Covid to simulate a return to normal conditions. For businesses that reported positive revenue growth during Covid, we consider pre-Covid average annual growth with a given weight to growth during Covid and the past 12 months.
2. Abbott is more profitable
- Abbott’s operating margin of 22.1% over the last 12-month period is slightly better than 20.5% for Intuitive Surgical.
- However, operating margin has been better for Intuitive Surgical over recent years.
- The numbers were 16.1% and 30.7% in 2019, before the pandemic, respectively.
- Intuitive Surgical’s free cash flow margin of 31.4% is also better than Abbott’s 22.9%.
- our Abbott operating income And the He entered intuitive surgeries Information panels contain more details.
- Considering the financial risks, intuitive surgery prices are much better. Its 0.5% debt as a percentage of equity is lower than Abbott’s 8.9%, while its 61.7% cash as a percentage of assets is higher than the latter’s 13.6%, meaning Intuitive Surgical has a better debt position and also has more cash cushion.
3. Network Everything
- We believe that Intuitive Surgical has shown better revenue growth and offers lower financial risk with a better debt position and more cash flow. Although the operating margin is currently slightly lower than Abbott’s, it has been better in recent years. On the other hand, Abbott is available at a comparatively lower rating.
- Now, looking at the outlook, using P/S as a base, given the high volatility in P/E and P/EBIT, we think Intuitive Surgical is currently the better option of the two, despite being the more expensive.
- The table below summarizes the revenue and return projections for both companies over the next three years and indicates the expected return 47% For intuitive surgery during this period and a 16% Abbott’s expected return, which means investors would be better off buying ISRG over ABT, based on Trefis Machine Learning analysis – Abbott versus intuitive surgery — which also provides more detail on how we arrived at these numbers.
Moreover, the Covid-19 crisis has caused many price stops, which can provide attractive business opportunities. For example, you would be surprised at how counterintuitive stock valuation can be Xylem vs. Merck.
With inflation soaring and the Federal Reserve raising interest rates, among other factors, ABT stock is down 25% this year. Can you fall more? We see Abbott stock drop Comparing its decline in previous market incidents. Here is a file Summary of the performance of all stocks in previous market events.
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