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Nasdaq Rises 29 as Intuitive Surgical Defies Robotic Surgery Competition; Moderna Jumps Again on Coronavirus Vaccine Prospects

By Dan Caplinger – Jul 17, 2020 at 5:02PM

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Broader market measures were mixed.

The stock market has had an up-and-down week, and Friday was no exception. Major market indexes finished mixed, but the Nasdaq Composite (^IXIC) and the Nasdaq-100 Index managed to post modest gains to finish the week.

The healthcare industry has gotten a lot of attention from investors lately, especially among companies that could play a role in fighting the coronavirus pandemic. Intuitive Surgical (ISRG 1.64%) doesn't have any direct connection to COVID-19, but many see the robotic surgery leader as a vital piece of ensuring that medical professionals can safely conduct procedures with minimal risk to themselves and their patients, and its stock climbed considerably. Meanwhile, Moderna (MRNA 0.46%) enjoyed significant gains as well on continuing hopes that a vaccine against COVID-19 could put an end to the suffering around the world.

Score one for Intuitive Surgical

Intuitive Surgical had a good day, as its shares climbed higher by nearly 8%. The maker of robotic surgical equipment remains the key player in its market, and bad news from a competitor could mean a lasting competitive advantage for Intuitive Surgical.

Two gloved hands manipulated a robotic surgical system above a patient's exposed abdomen.

Image source: Intuitive Surgical.

Ever since Intuitive Surgical popularized robotic surgical systems, other companies have sought to come out with platforms of their own. Yet that's more difficult than it might seem. For Johnson & Johnson (JNJ 0.02%), ongoing challenges are likely to cause a substantial delay before the healthcare conglomerate will be ready to conduct trials involving humans. As CEO Alex Gorsky explained in the conference call after J&J's earnings Thursday morning, it could be late 2022 before trials begin, with the approval process necessarily taking longer still.

Analysts also believe that competing devices from J&J and Medtronic (MDT 1.57%) will have to go through a potentially lengthier process even once their robotic platforms are ready to go. Rather than simply making a declaration, companies might have to go through a full scientific and regulatory review with the U.S. Food and Drug Administration before selling robotic devices.

All that is good news for Intuitive Surgical and its current leadership role in the industry. The longer rivals have to wait before going up against the leader, the longer Intuitive Surgical can stay ahead of the pack.

Another move higher for Moderna

Elsewhere, shares of Moderna finished higher by 16%. The move represented another all-time high for the biotech stock, with investors still excited about the company's COVID-19 vaccine candidate.

Some investors attributed the move to greater interest in vaccine-producing companies overall. Johnson & Johnson said it would be able to move forward with late-stage clinical trials for its candidate vaccine in September, which was earlier than most had previously expected. Ordinarily, that might have sent shares of rivals like Moderna lower. However, even with the move up in schedule, J&J is still behind Moderna's current expectation to start its late-stage clinical trials later in July.

In addition, those watching Moderna may now realize that its participation in Operation Warp Speed means that the company can afford to start producing significant amounts of its mRNA-1273 vaccine even before it's certain it will be effective. Part of the funding from the federal government is meant to go toward building out manufacturing capacity. If mRNA-1273 turns out be a winner, then Moderna wants to get it out to the public as quickly as it can.

With COVID-19 case counts skyrocketing, it looks like a vaccine might be the only strategy to put a stop to the pandemic, at least in the U.S. market. That gives Moderna an opportunity it won't want to squander.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Intuitive Surgical. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2022 $580 calls on Intuitive Surgical and short January 2022 $600 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.

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