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The global robotic surgery market is growing rapidly, driven by technological advancements, particularly in artificial intelligence (AI), which are transforming the healthcare, medical devices, and biotech industries. One standout player, Intuitive Surgical (ISRG), has significantly advanced minimally invasive surgeries across multiple specialties with its flagship product, the da Vinci Surgical System. Founded in 1995, Intuitive Surgical has achieved a remarkable market share of approximately 79.8% in the robotic surgery industry, despite its relatively short time in operation. The company’s first-mover advantage has given it a significant lead in technological development, brand recognition, and clinical adoption.
Investors are drawn to Intuitive’s innovation, revenue growth, and commanding market position. Last year, its stock outperformed the S&P 500 Index ($SPX) with a 57.7% gain compared to the index’s 24% increase. Recently, the company reported impressive fourth-quarter results, leading to a 9.4% rise in its stock this year. Following these results, Citi analyst Joanne Wuensch reaffirmed a “Buy” rating on ISRG and set a high price target of $711. Let’s dive into Intuitive’s earnings and explore why analysts remain so optimistic about the stock.
Intuitive Surgical’s Strong Q4 Beats Wall Street Estimates
The da Vinci surgical system, first introduced in 2000, has become the benchmark for robotic surgery, with installations in hospitals across the globe. It enables surgeons to perform intricate procedures with enhanced precision and minimal invasiveness, resulting in shorter recovery times for patients. In the fourth quarter, Intuitive Surgical reported a 25% increase in total revenue, reaching $2.41 billion, while adjusted earnings grew by 38% to $2.21 per share — both figures exceeding consensus estimates. This growth was fueled by higher placements of da Vinci systems, increased procedure volumes, and robust recurring revenue from instruments and accessories.
During Q4, the company installed 493 da Vinci systems, while global da Vinci surgical procedures grew 18% year-over-year. By the end of 2024, the total number of installed da Vinci systems had reached 9,902, up from 8,606 the previous year. Additionally, Intuitive placed 69 Ion systems in the quarter, contributing to 28,000 Ion procedures performed. The Ion endoluminal system, designed for lung biopsies, received FDA clearance in 2019. Intuitive Surgical not only sells its robotic systems but also generates recurring revenue from the sale of instruments and accessories used with the systems, as well as from service contracts. This business model ensures a reliable income stream and strong profit margins, making it particularly attractive to long-term investors. In Q4, revenue from instruments and accessories grew 23%, reaching $1.41 billion.
The company boasts a robust balance sheet, with over $8.8 billion in cash and investments and no significant debt. This financial strength allows Intuitive to invest heavily in research and development (R&D) to drive innovation and develop new technologies. Last year, Intuitive received FDA clearance for the da Vinci 5, its next-generation multi-port robotic system. The company installed 362 da Vinci 5 systems in 2024, which facilitated over 32,000 procedures. Looking ahead, Intuitive plans a full global launch of the da Vinci 5 in 2025, alongside regional clearances and potential new product releases.
Looking ahead to 2025, analysts project Intuitive Surgical's revenue to grow by 14.6%, reaching $9.5 billion. By 2026, revenue is expected to climb further, rising 16% to $11.1 billion. Analysts also anticipate earnings per share (EPS) to increase by 9.3% in 2025, reaching $8.02, and grow another 17.6% to $9.43 in 2026. However, with ISRG stock currently trading at 71 times its projected 2025 earnings, the valuation appears steep.
Is ISRG Stock a Buy, Hold, or Sell?
In addition to Citi, several other firms, including Barclays, BTIG, and Wells Fargo, reaffirmed their “Buy” ratings on Intuitive Surgical stock following its strong quarterly performance. Overall, ISRG stock holds a “Moderate Buy” rating. Among the 26 analysts covering the stock, 17 recommend a "Strong Buy," two rate it as a "Moderate Buy," and seven suggest "Hold." Currently, ISRG is trading near its average target price of $596.08. The highest price estimate of $711 indicates a potential upside of nearly 25% over the next 12 months.
The Bottom Line
Although the stock's short-term upside and lofty valuation may not appear attractive, Intuitive Surgical holds significant long-term potential in the AI-driven robotic surgery market. Industry projections suggest the AI-based surgical robotics market could grow from $8.66 billion in 2024 to an impressive $22.9 billion by 2030. Additionally, a study published in the Journal of Hematology & Oncology highlighted that AI-powered medical nanorobots could eventually perform complex procedures directly within the bloodstream.
Intuitive has already demonstrated its value by securing a dominant position in the robotic surgery market. Its extensive installed base creates a strong competitive advantage, as hospitals face high switching costs and require substantial training to adopt alternative systems. For long-term investors, Intuitive remains a compelling opportunity in the AI-robotic surgery space.
