Medtronic is a solid choice for dividend investors, but Intuitive Surgical is a better option for growth-oriented investors.
Intuitive Surgical will continue dominating its niche even as Medtronic enters the market.
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There are compelling reasons for some investors to consider investing in Medtronic (NYSE: MDT), depending on their goals and risk tolerance. It is a well-established healthcare leader that generates consistent revenue and profits, with an impressive dividend track record, making it a good choice for risk-averse income seekers.
However, for other investors, particularly those focused on aggressive growth, Medtronic may not be a suitable choice. There are far better options on the market, including Intuitive Surgical (NASDAQ: ISRG).
Medtronic is a larger, more mature medical device company whose quarterly revenue dwarfs that of Intuitive Surgical. However, the latter typically records stronger top-line growth.
Intuitive Surgical should continue doing that for a while. The company leads the market for robotic-assisted surgery (RAS) devices, thanks to its da Vinci surgical system, which is cleared for use across a wide range of procedures, including general surgery, urologic procedures, hernia repairs, mastectomies, and more. The minimally invasive procedures that the gadget enables surgeons to perform yield better health outcomes than traditional open surgeries. Here’s the best part: Intuitive Surgical should ride this tailwind through the next decade.
One of the company’s growth drivers will be an increase in procedure volume, driven by expansions across more indications. Intuitive Surgical also utilizes data from clinical trials and real-world use to enhance its device, resulting in increased adoption among physicians as they observe even better outcomes for their patients. Investors can rest assured that Intuitive Surgical will continue to make breakthroughs of this type, leading to stronger demand for the da Vinci system. A larger installed base means higher procedure volumes and more sales from instruments and accessories.
All these factors should enable Intuitive Surgical to continue growing its revenue at a significantly faster rate than its larger peer over the next decade — and potentially deliver explosive returns along the way, making it a better growth stock.
It’s worth noting that Medtronic may soon launch its own RAS device, the Hugo system, in urologic procedures, where it will directly compete with Intuitive Surgical. Even if that will be an important step for Medtronic, Intuitive Surgical should remain the top player and still outpace its challenger.
