Healthcare stocks weren't immune to the overall stock market sell-off on Thursday caused by increased worries about novel coronavirus COVID-19. Shares of Alnylam Pharmaceuticals (ALNY 1.01%) closed 8.6% lower after falling as much as 11.7% earlier in the day. ResMed (RMD 0.51%) stock dropped 11.4%, and shares of Intuitive Surgical (ISRG 3.19%) finished the day down 10.2%.
Few stocks can swim against the current during a massive market meltdown. That's true even when the companies' prospects shouldn't be impacted very much by the reason behind the crash. And for Alnylam, ResMed, and Intuitive Surgical, business should proceed as usual, even with a global pandemic raging.
Alnylam could even potentially benefit from COVID-19. The biotech announced last week that it's teaming up with its partner Vir Biotechnology to expand an ongoing collaboration to include the development of RNA interference (RNAi) therapies targeting the novel coronavirus.
ResMed has a different angle to possibly boost its business as a result of the pandemic. The company makes noninvasive ventilation devices for use by patients with respiratory problems, which could experience increased demand if the COVID-19 outbreak intensifies. ResMed's other major business lines, including its CPAP devices and post-acute care software, shouldn't be negatively affected by the coronavirus.
Likewise, Intuitive Surgical's da Vinci robotic surgical systems should enjoy continued demand, regardless of what happens with COVID-19. Perhaps some surgical procedures could be delayed a little, but it seems unlikely that Intuitive will take a significant financial hit related to the spread of the coronavirus.
The next best thing that investors can do right now with these healthcare stocks is... nothing. What's the best thing to do? Scoop up some shares on the cheap if you like the prospects for the companies, because those prospects haven't changed with the escalating concerns about COVID-19.
My view is that Intuitive Surgical is an especially great pick. The company is highly profitable, has a boatload of cash, and benefits from long-term demographic trends -- older individuals will need more surgeries that are ideally suited for robotic assistance. And Intuitive is expanding into areas beyond robotic surgery.
The market meltdown might be scary, but it's also an opportunity for patient investors.