The "greying of America" is happening. By 2030, the entire baby boomer generation (born between 1946 and 1964) will be over 65. At that point, the number of seniors in America will reach a record 73 million. Plenty of healthcare stocks will benefit from this trend. One in particular is Intuitive Surgical (ISRG +0.39%). This "silver tsunami" trend should help Intuitive remain a top growth stock.
Here's how.
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Intuitive Surgical and its da Vinci System
Intuitive Surgical is a medical device technology company. Its flagship product is its da Vinci robotic surgery system. What makes the platform unique is how it enables complex surgeries like prostate removals and colorectal procedures to be minimally invasive, reducing the chance of complications and speeding up recovery time.
Competing medical device companies are working to capture a share of this market. However, as the first mover in the space, Intuitive still has nearly 60% market share. Because of its widespread use, most resident surgeons-in-training learn to do robot-assisted surgeries on the da Vinci platform. It's not surprising that Intuitive has maintained its competitive edge.
NASDAQ: ISRG
Key Data Points
The "silver tsunami" and other growth catalysts
Operating under a "razor and blades" model, where a company profits from both system installation and the sale of consumable instruments used by the system, Intuitive stands to profit greatly from increased usage driven by an aging population requiring various surgeries. With the senior population soaring, the number of surgeries in America is on the rise.
Even better, Intuitive is working to expand the platform's total addressable market. First, its working to get approval for use in specific surgeries. Second, it's expanding to markets outside the United States. Currently, da Vinci has low market penetration overseas.
Investors should note that the market is well aware of Intuitive's growth potential. Shares currently trade for 45 times forward earnings, higher than many other medical device stocks. However, if the company continues to grow earnings at a double-digit pace, shares are likely to continue commanding a premium valuation, with the stock rising in line with earnings growth.
