Intuitive Surgical stock broke out Wednesday after the robotic surgery giant crushed Wall Street's expectations in its preliminary fourth-quarter report.
During the December quarter, sales surged 25% to $2.41 billion, the company said. That easily beat forecasts for $2.2 billion, according to FactSet.
The lion's share of the beat came from system placements. Intuitive Surgical installed 493 da Vinci robotic surgery systems in the fourth quarter. That beat expectations by 19% and contributed to two-thirds of the revenue beat, Evercore ISI analyst Vijay Kumar said in a report. Of those, 174 were new da Vinci 5 systems, the company said in its news release.
"Combined with increasingly vocal plans about new products (i.e., software for enhanced imaging to increase procedure adoption) and an expanding TAM (total addressable market), this remains a growth story with durable tailwinds to deliver on and likely above investor expectations," William Blair analyst Brandon Vazquez said in a client note.
Intuitive Surgical stock rocketed 7.7% to 580.11. Shares topped a flat-base buy point at 556.23 on the weekly chart, according to MarketSurge.
Procedure Volume Is Key
Part of the beat stemmed from better-than-expected procedure volume. The number of procedures using Intuitive Surgical's systems climbed 18%, above calls for 16.9%. More procedures mean higher sales of single-use instruments and accessories. Sales of those products jumped 23% to $1.41 billion, topping projections for $1.35 billion.
But the company expects procedures to grow just 13% to 16% in 2025, lagging the 17% growth rate Intuitive Surgical saw in 2024. But that was in line with expectations for 15.5% and historical growth rates, William Blair's Vazquez said.
"Our initial read on guidance and 2024 results suggests that Intuitive has an achievable pathway to deliver upside to these estimates," he said. "Specifically, even the high end of this guidance range suggests system utilization slightly below 2024 levels, and we believe the ramping-up launch of da Vinci 5 plus new software launches in 2025 can act as a tailwind to procedure growth."
Intuitive Surgical now sees a total addressable market of 8 million cases, 1 million above its prior forecast, he added. This suggests the company is just 34% penetrated into this market exiting 2024 and still has room to more than double its total addressable market to 22 million procedures over time.
Vazquez rates Intuitive Surgical stock a buy.
Follow Allison Gatlin on X/Twitter at @IBD_AGatlin.
