Investopedia: 2011 - Another Sick Year For Larger Med-Tech

Healthcare may not have been in the emergency room, or even the ICU, during 2011, but this sector was sick from beginning to end. Unfortunately, the story that was true in 2010 is still true today - higher unemployment means fewer people with health insurance, and even those with coverage are more nervous about taking time off or meeting their copays. At the same time, hospitals and the federal government continue to draw hard lines on pricing, and there have been few innovative product launches to stimulate new markets.


Just to frame the discussion, the Dow Jones U.S. Medical Devices Index Fund (NYSE:IHI) has fallen more than 5% year-to-date as of this writing.

A Very Familiar Name on Top
Yet again, one name dominated the list of top-performing med-techs. Intuitive Surgical (Nasdaq:ISRG) is still really the only game in town when it comes to surgical robots, and demand for these devices has remained high despite a fairly conservative environment for hospital equipment. Intuitive has seen revenue rise nearly 30% over the trailing twelve months, while the stock has jumped nearly 70%. Trading at over 23 times EBITDA and nearly 10 times revenue, this is hardly an undiscovered bargain in the space, but it does offer the growth that institutional investors are so desperate to find. (For related reading, see A Primer On The Biotech Sector.)


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