Intuitive Surgical (ISRG 0.80%) was a pioneer in minimally invasive robotic-assisted surgery technology, and its leadership in the field has long been a key edge for the company. Thanks to strong sales growth and climbing profitability over the past two decades, it has rewarded long-term shareholders handsomely: The stock has returned a staggering 24,632% since its 2003 initial public offering.
Yet even the best companies can't escape the stock market's regular ups and downs. At the time of this writing, global economic concerns and Intuitive Surgical's mixed outlook have caused shares of the medical device giant to drop by about 18% from the all-time high they set in January.
But has this sell-off created a buy-the-dip opportunity, or is it a signal that more turbulence is ahead?
NASDAQ: ISRG
Key Data Points
The leader in surgical robotics
Robotic-assisted surgeries have revolutionized healthcare. By allowing surgeons to operate via much smaller incisions, they generally result in reduced blood loss for patients, faster recovery times, and improved outcomes. Surgeons performed nearly 2.7 million procedures using Intuitive Surgical's da Vinci system in 2024 alone -- twice as many as five years ago.
The company's new da Vinci 5 system, cleared by the Food and Drug Administration (FDA) last year, marks a transformative leap in capabilities. With more than 150 design advancements and 10,000 times more computing power than the previous da Vinci Xi model, it's poised to drive Intuitive's sales growth for years to come.
Image source: Getty Images.
That said, the full launch of the da Vinci 5 may cause some near-term operating and financial volatility for the company as hospitals and surgical centers gradually transition to the new platform. Intuitive is guiding for total da Vinci procedure volume to increase by between 13% and 16% in 2025 -- a solid figure but also a slight slowdown on a percentage basis compared to the 17% growth pace last year. Similarly, the company anticipates a modestly lower operating margin, given the shifting sales mix and costs related to the da Vinci 5 rollout.
The impacts of all this are evident in Wall Street's earnings estimates for the company. The consensus projection among analysts tracked by Yahoo! Finance is that Intuitive Surgical's earnings per share (EPS) will grow by 9.6% in 2025, well below last year's 28.5% growth pace. Nevertheless, the deceleration may be temporary; analysts foresee EPS growth reaccelerating toward 17.5% in 2026.
By this measure, analysts view 2025 as a transitional year that will lay the groundwork for stronger momentum in 2026 and beyond.
| Metric | 2024 | 2025 Estimate | 2026 Estimate |
|---|---|---|---|
| Revenue growth (YOY) | 17.2% | 14.9% | 15.6% |
| Earnings per share (EPS) | $7.34 | $8.06 | $9.47 |
| EPS growth (YOY) | 28.5% | 9.8% | 17.5% |
Data source: Yahoo! Finance. YOY = Year over year.
Reasons for caution
By all accounts, Intuitive Surgical is in great shape and on track to continue delivering profitable growth, although the muted trends for 2025 may explain some of the recent stock price weakness.
Another concern could be the evolving competitive landscape in the robotic-assisted surgery space. While the da Vinci system is unmatched in the number of approved indications worldwide, several major healthcare sector players are introducing their own surgical robotic platforms. These include the Hugo robotic-assisted surgery (RAS) system from Medtronic, the Luna platform from Asensus Surgical, and Johnson & Johnson's Ottava robot. Some potential Intuitive customers could be tempted by these alternatives, possibly at lower prices.
Chief Financial Officer Jamie Samath noted that the competitors seeking FDA clearance for their machines or that have products already available internationally could at least lead to delays in new customer orders for Intuitive. On the fourth quarter earnings conference call, Samath said:
What you're seeing is an increasing number of competitors get clearances in various markets, including in the U.S. ... So, we're just acknowledging that as competition increases, there is the possibility outside of China, the selling cycles could lengthen.
All this is occuring against a backdrop where shares of Intuitive Surgical command a premium valuation. The stock is trading at a forward price-to-earnings (P/E) ratio of 63, just above its decade average of about 62. But in that decade, the company's growth was accelerating. A scenario where sales trends or earnings begin to disappoint could lead to further downside in the stock, a risk investors will need to balance.
ISRG PE Ratio (Forward) data by YCharts.
Decision time: I'm on the sidelines
There's a lot to like about Intuitive Surgical as a leader at the intersection of healthcare and technology. Still, even after the latest dip, I believe the stock is too expensive to jump into and buy aggressively. I sense that the company will struggle to exceed expectations this year, potentially limiting the stock's upside. Longtime shareholders can continue holding, but investors watching from the sidelines may find better opportunities elsewhere.
