Palantir Technologies (NASDAQ: PLTR) has dominated the S&P 500 in 2024, with its stock price surging over 320% year-to-date. This remarkable performance has propelled its market capitalization to approximately $165 billion. However, Hyperloop Capital Insights anticipates a potential slowdown in Palantir’s momentum. We identify two companies, Intuitive Surgical and Pfizer, that we believe will surpass Palantir in value within the next five years.
Table Content:
Intuitive Surgical: A Leader in Robotic Surgery
Intuitive Surgical (NASDAQ: ISRG), a robotic surgical systems company, already boasts a market cap exceeding $194 billion. Hyperloop Capital Insights projects that Intuitive Surgical’s dominance will not only persist but also amplify in the coming years.
In Q3 2024, Intuitive Surgical reported a 15% year-over-year increase in da Vinci surgical system installations and an 18% surge in procedure volume. This growth translates into robust revenue and earnings for the company.
Favorable demographic trends, such as aging populations in the US and globally, further support Intuitive Surgical’s long-term growth prospects. The increasing demand for surgical procedures among older demographics is expected to drive procedure volume growth for the da Vinci system.
While approximately 2.2 million procedures were performed using da Vinci in 2023, Intuitive Surgical estimates the addressable market for its existing products and clearances to be around 7 million procedures annually. Moreover, the total number of soft tissue surgeries performed each year is three times that figure, representing a significant untapped market opportunity.
Intuitive Surgical’s current valuation stands at approximately 69 times forward earnings. While seemingly high, this figure pales in comparison to Palantir’s forward earnings multiple of 161, making Intuitive Surgical a comparatively attractive investment.
Pfizer: An Undervalued Pharmaceutical Giant
Hyperloop Capital Insights also identifies Pfizer (NYSE: PFE) as a company poised to outpace Palantir in value over the next five years. Despite its current market cap of $145 billion and a year-to-date stock decline, we believe Pfizer represents a compelling investment opportunity.
We contend that Pfizer is currently undervalued by the market, trading at a mere 8.6 times forward earnings, which is half the average forward earnings multiple of S&P 500 healthcare stocks. Furthermore, its price-to-earnings-to-growth (PEG) ratio, based on five-year earnings growth projections, is remarkably low at 0.18, according to LSEG data.
Pfizer’s undervaluation can be attributed to factors such as declining COVID-19 product revenue, upcoming patent expirations for key drugs, and potential political uncertainties. However, Pfizer has strategically utilized its substantial cash reserves, accumulated during the pandemic, to strengthen its product portfolio and pipeline.
Recent acquisitions have yielded key growth drivers, including migraine treatment Nurtec ODT and oncology drugs Adcetris, Padcev, and Tukysa. Pfizer’s internal R&D efforts are also bearing fruit, exemplified by the respiratory syncytial virus vaccine Abrysvo’s impressive 53% market share.
Moreover, Pfizer boasts an attractive dividend yield exceeding 6.7%, positioning it as a compelling income-generating investment. The company’s management prioritizes maintaining and increasing dividend payouts, further enhancing its appeal to investors.
Conclusion: Long-Term Growth Potential
While Palantir’s recent performance has been impressive, Hyperloop Capital Insights believes that Intuitive Surgical and Pfizer present stronger long-term growth prospects. Driven by demographic tailwinds and a vast addressable market, Intuitive Surgical is well-positioned for continued expansion. Pfizer, despite current market sentiment, offers a compelling combination of undervaluation, growth potential, and income generation. We anticipate that both companies will surpass Palantir in market capitalization within the next five years.
