The medical technology sector has been undervalued due to capital going west to AI. BMO shouted: a historic “golden pit” has emerged, and three major targets, including Intuitive Surgery (ISRG.US), are the first to be promoted

The Zhitong Finance App learned that BMO Capital Markets lists Intuitive Surgery (ISRG.US), Globus Medical (GMED.US), and Teleflex (TFX.US) as the most confident stocks in the medical technology field. The brokerage firm began to cover this hard-hit sector and said it had ushered in a buying opportunity.

In a research report on Wednesday, analyst Vic Chopra pointed out that the current trading price of the medical technology sector is about 31% lower than its 10-year relative average, which is close to the biggest discount margin for the S&P 500 index in ten years.

A BMO survey showed demand for hospital surgeries was still strong, so the analyst blamed the sector's weakness mainly on “capital flows and policy noise rather than fundamentals.” He said the fundamentals looked “healthy, and the first quarter results generally exceeded expectations.”

“We see healthcare technology as an underrated and undervalued sector, with marginal buyers absent due to capital rotation into the AI/tech sector,” Chopra wrote. He believes this disconnect provides an extremely attractive opportunity to own “the best corporate franchise of its kind” prior to potential valuation restructuring.

He gave Intuitive Surgery (ISRG.US), Globus Medical (GMED.US), Teleflex (TFX.US), ALGN.US (ALGN.US), STROWMAN HOLDINGS (SAUHY.US), Enovis (ENVS.US), and Alphatec Holdings (ATEC.US) ratings of “outperforming the market”.

General Electric Healthcare (GEHC.US), Gemma (ZBH.US), Solventum (SOLV.US), Henry Shane (HSIC.US), Envista (NVST.US), Kangmei (CNMD.US), Dunstable Synod (XRAY.US), and Integra Life Sciences (IART.US) received a rating “on par with the market”.

Chopra said that the current trading price of Intuitive Surgery, the “number one star stock” in his mind, is about 31% off compared to its three-year historical price-earnings ratio, even though it has the strongest fundamental characteristics among its peers. The analyst also highlighted Globus Medical's industry-leading margin growth and attributed this in part to the company's acquisition of Nevro last year. As for Teleflex, Chopra said the market consensus has yet to reflect the “inflection point” of the company's 2027 earnings per share (EPS), which could give the stock room to rise. He set the target prices for the three companies at $518, $94, and $159, respectively.