If you had to bet on two “big picture” sectors for long-term investing, you can’t go wrong with technology or healthcare. Both are ubiquitous and in their own ways are at the forefront of global innovation, solidifying their long-term viability as investment opportunities. But combine the two with healthcare tech stocks and you’ve got some serious upside potential.
Of course, ETF investing is a great way to capture industry-wide trends. For exposure to health tech, it’s hard to beat a combination of a comprehensive healthcare ETF like the iShares Global Healthcare ETF (NYSEARCA:IXJ) and a speculative biotech ETF like the iShares Genomics, Immunology, and Healthcare ETF (NYSEARCA:IDNA). But it’s more fun to play stock jockeying, and in either case, high fees eat into your overall gains.
If you want to get your hands on some best-in-class healthcare tech stocks in 2024 rather than playing it safe with a broad-based health tech ETF, it’s hard to beat these top three stocks.
CRISPR Therapeutics (CRSP)
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CRISPR Therapeutics (NASDAQ:CRSP) made headlines earlier this month when its sickle cell treatment, Kasgebi, became the first gene-edited therapy approved by the FDA. Of course, the impact is huge. FDA approval for a serious disease like sickle cell opens the door to long-term gene editing and CRISPR technology treatments ranging from complex chronic diseases to everyday wound healing. But despite the huge impact, CRSP’s stock has fallen nearly 15% since the announcement.
The lack of investor enthusiasm is primarily due to Casgevy’s short-term operational and financial impacts, rather than what approval would mean conceptually. Casgevy is expensive, costing more than $2 million. At the same time, the U.S. market size for sickle cell disease is only 100,000. While the treatment would be life-changing for those who receive it, the high cost and limited marketability mean that drug sales will not be enough to match the high research and development costs it took to get Crispr to this point.
But if you’re looking to invest for the long term, finding the revolutionary healthcare tech stocks of tomorrow is as easy as investing in CRSP, whose technology has proven safe enough for widespread distribution, marking a groundbreaking moment for the industry.
Teladoc Health (TDOC)
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Teladoc Health (NYSE:TDOC), like other stocks perfect for these times such as Peloton (NASDAQ:PTON) and Zoom Video Communications (NASDAQ:ZM), has fallen victim to the mid-pandemic mania, soaring and then dropping to a fraction of its past highs. TDOC, in particular, is trading more than 90% below its past highs. But this decline is no indictment on Teladoc’s business model or viability. And while it may not reach past highs anytime soon, investing in Teladoc today is a way to capture an expanding segment of healthcare technology stocks.
Telehealth has proven viable during the pandemic, and it’s here to stay. Currently, over 20% of adult patients use telehealth as an alternative to in-person care. Furthermore, the aging population is accelerating this trend, with 43% of patients over 65 using telehealth services compared to only 29% of patients between the ages of 18-29. The nation’s population is aging rapidly, and as this trend continues, telehealth will catch up and become more prevalent.
Teladoc’s market share has a lot of room for improvement. But there are important considerations when looking at the rankings. Teladoc is narrowly beaten by Zoom and Cisco Systems (NASDAQ:CSCO). But those are generalist platforms, and among remote platforms focused on telehealth, Teladoc is neck and neck with direct competitors Amwell (NYSE:AMWL) and Doxy.me. But the system will become more niche, and it will not become more generalized. It only takes one data breach or HIPAA lawsuit to stop Zoom and other broad platforms from making inroads in healthcare. As healthcare needs evolve, so will the mechanisms of delivery and interaction, making Teladoc one of the best medtech stocks for 2024.
Intuitive Surgical (ISRG)
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Intuitive Surgical (NASDAQ:ISRG) captures another long-term healthcare trend: the increasing reliance on robots during surgical procedures. ISRG stands out from the other two healthcare tech stocks on our list because, unlike CRSP and TDOC, it’s far from a speculative investment. ISRG is a leading healthcare technology company ranked on the NASDAQ-100 and S&P 500.
Despite the relative overvaluation, analysts are nearly all bullish on ISRG. 19 of those surveyed rate the stock as a “buy.” Notably, no analyst calls the stock a “sell,” with the remaining rating ISRG as a “hold.” The average consensus estimate is $331.91, but there is a wide spread between estimates. Research firm EquitySet suggests a fair price target of $409 and that the stock is 18% undervalued at current levels.
The most recent quarter saw clear bullish trends for ISRG, adding to the tailwinds: during the period, procedures utilizing ISRG’s proprietary surgical robotics platform increased 19%, posting a 17% CAGR since 2019. At the same time, revenue and profits soared 12% and 29%, respectively. If you’re looking to anchor your basket of healthcare technology stocks, a stable yet innovative large company like Intuitive Surgical is a strong fundamental.
As of the publication date of this article, Jeremy Flint did not hold any positions in the securities mentioned. Opinions expressed in this article are those of the author and follow InvestorPlace.com’s Publication Guidelines.
Jeremy Flint is an MBA and seasoned financial writer with an expertise in content strategy for asset managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed income investing, alternative investments, economic analysis, and the oil, gas, and utility sectors. Jeremy’s work can also be found at www.jeremyflint.work.
