Intuitive Surgical stock plunged late Tuesday after the robotic surgery giant said President Donald Trump's tariffs could have a "material" impact on the company's financials this year.
For the year, the Sunnyvale, Calif.-based company now expects its gross profit margin — the percentage of revenue remaining after deducting the cost of goods sold — to land in a range between 65% to 66.5% of revenue this year. That's down from 69.1% in 2024 and trails Wall Street's current model for 67%.
And that just accounts for tariffs that are already in place.
"Should additional tariffs be implemented, the adverse impact on the Company's financial results in 2025 (including the decrease in expected non-GAAP gross profit margin) could be material," Intuitive Surgical said in its news release.
Intuitive Surgical stock tumbled more than 5% to 451 in late trades. Shares are consolidating with a buy point at 616, but remain below their 50-day moving average, according to MarketSurge. Intuitive Surgical stock is an IBD Tech Leader.
Intuitive Surgical Stock Hammered On Tariffs
For Intuitive Surgical, tariffs could prove a steep hurdle.
"The ultimate impact from any tariffs will depend on various factors, including the volume of system sales in China, the proportion of components procured and finished goods manufactured outside of the United States, and the amount, scope, nature, and timing of the tariffs," Intuitive Surgical said.
Intuitive Surgical is not the first big health care company to say tariffs could underscore financials this year and next.
Last week, Dow Jones giant Johnson & Johnson guided to $400 million in tariffs-related costs this year, according to the Wall Street Journal. Chief Executive Joaquin Duato suggested tariffs could broadly impact supply chains, leading to potential shortages and increased costs.
Eli Lilly CEO David Ricks told BBC earlier this month that tariffs "will be hard to come back from." He expects companies to cut into their research and development costs to offset the impact. Lilly is reporting its first-quarter metrics on May 1.
Bank of America analyst Travis Steed said medtech tariffs are skewing about double what he initially expected following first-quarter reports from J&J and Abbott Laboratories. J&J has about $1 billion to $1.5 billion in annualized medtech tariffs, while Abbott faces about $700 million annualized.
"We had thought medtech was more immune and did not estimate that in our tariff model," Steed said in a client note. "Instead, U.S. to China has been a big piece of the tariff headwind and the biggest delta between our tariff model and the actual impacts."
Roughly a third of Intuitive Surgical's sales come from outside the U.S., according to FactSet. But it's not clear how much stems from China.
Top- And Bottom-Line Beat Expectations
Other elements of Intuitive Surgical's report were stronger, though not enough to buoy shares.
The company earned an adjusted $1.81 per share on $2.25 billion in sales during the first quarter. Profit beat expectations and grew nearly 21% year over year. Sales also beat and advanced 19%.
Intuitive Surgical also hiked its guidance for procedure volume growth for the year. The company now expects the number of procedures performed using its da Vinci robotic surgery system to climb 15% to 17% this year, up from the guidance it issued three months ago for 13% to 16% growth. Last year, the number of procedures performed grew 17%.
First-quarter procedure growth was also better than expected at 17% vs. forecasts for 15.3%.
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