2 Beaten-Down Stocks to Buy on the Dip

Key Points

• Intuitive Surgical's dominance in its niche should allow it to overcome tariffs and increased competition.

• Regeneron Pharmaceuticals is relying on its innovative capabilities to overcome recent challenges.

• 10 stocks we like better than Intuitive Surgical ›

Investors haven't been kind to Intuitive Surgical (NASDAQ: ISRG) and Regeneron Pharmaceuticals (NASDAQ: REGN) this year. Both healthcare leaders have encountered company-specific issues that have led to sell-offs. Intuitive Surgical's stock is down 15% this year, while Regeneron has shed 21% of its value.

However, there are excellent reasons to think both companies could rebound, and if that's the case, now might be a wonderful time to purchase their shares on the dip. Here's why I remain bullish on these medical companies.

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1. Intuitive Surgical

Intuitive Surgical is facing at least two main issues. First, President Donald Trump's tariffs could have a significant impact on the company's financial results, potentially decreasing its earnings. Second, there is mounting competition in its niche. Intuitive Surgical develops and markets robotic-assisted surgery (RAS) devices. Its best-known one is the da Vinci system, which is cleared across a range of indications, from general surgery to urologic procedures, weight loss surgeries, and more.

However, medical device giant Medtronic is inching closer to launching its Hugo system in urologic procedures in the U.S. Do these challenges make Intuitive Surgical's prospects unattractive? Not at all, in my view. Even with the impact of tariffs, the company's financial results remain excellent. Second-quarter revenue grew by 21% year over year to $2.44 billion, despite a 1% hit from tariffs.

Also, although competition is intensifying, the RAS market remains deeply underpenetrated. Furthermore, Intuitive Surgical has a significant established lead in this field, having launched its da Vinci system in 2000. The company's advantage doesn't just come from its large installed base of 10,488 systems as of the second quarter. Real-world use of its crown jewel has proven its efficacy beyond what can be established in clinical trials, and it has also provided Intuitive Surgical with the data and insight to improve its device.

Last year, the company launched the fifth generation of its da Vinci system, which was well-received in the market. Intuitive Surgical also benefits from high switching costs associated with the price of its da Vinci systems, making it likely to retain most of its customers. The company will profit from increased demand for surgical procedures. Though it makes money from the sale of its devices, it makes even more revenue from instruments and accessories, which is tied to procedure volume.

That's a long-term trend that could ride for a while, given the world's aging population and increased demand for medical services. So, Intuitive Surgical might be down right now, but the stock remains attractive to long-term investors.

2. Regeneron

In the second quarter, Regeneron's revenue increased by 4% year over year to $3.68 billion. While that may not seem impressive, it's essential to put things into perspective. The drugmaker is facing competition, including from biosimilars for Eylea, a medicine used to treat wet age-related macular degeneration. However, it is mitigating the losses associated with that product, thanks to a new, high-dose formulation of it, whose sales should continue moving in the right direction as it earns some label expansions.

The rest of Regeneron's lineup looks pretty strong. The company's revenue from cancer medicine Libtayo is growing at a healthy clip, while its most important growth driver, eczema treatment Dupixent, remains as robust as ever. Regeneron shares global rights to Dupixent with Sanofi. The medicine has been performing well over the past year, thanks to new indications, including an important one in COPD. Dupixent's sales in the second period (recorded by Sanofi) grew by 22% year over year to $4.34 billion.

Meanwhile, the medicine could earn even more label expansions in the future, seeing as it is still being tested across a range of potential indications. Libtayo could also earn a label expansion of its own in squamous cell carcinoma. Furthermore, Regeneron recently received approval for a new cancer medicine, Lynozyfic.

The company's pipeline features several additional products that could enhance its lineup. So, despite the competition for Eylea, Regeneron has launched a new formulation of the medicine, which is helping it stay afloat. The company is also launching new products and expanding labels for existing growth drivers. The stock looks like a buy despite the headwinds it has encountered.

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Prosper Junior Bakiny has positions in Intuitive Surgical. The Motley Fool has positions in and recommends Intuitive Surgical and Regeneron Pharmaceuticals. The Motley Fool recommends Medtronic and recommends the following options: long January 2026 $75 calls on Medtronic and short January 2026 $85 calls on Medtronic. The Motley Fool has a disclosure policy.