Intuitive surgery today
Intuitive Surgical
As of 01/21/2025 16:00 Eastern
- 52 week range
- $362.14
▼
$606.27
- P/E ratio
- 97.13
- Target price
- $554.17
Leading developer of robotic surgery systems Intuitive Surgery Inc. NASDAQ: ISRG started the new year by publishing its forecast for the fourth quarter of 2024. Its da Vinci surgical system has had first-mover advantage since its launch in 2000, becoming the first commercial robotic surgical platform to be approved by the FDA. It has maintained its dominance and moat for over two decades in the medical sector, expanding its list of approved procedures for general laparoscopic surgery to include urology, gynecology, cardiothoracic and colorectal surgery. Stocks hit new all-time highs amid growth forecasts.
Empowering surgeons with robotics
The da Vinci Surgical System allows surgeons will perform robotic operations. It doesn’t actually perform procedures autonomously. Rather, it allows the surgeon to work more efficiently by increasing the field of view with high-definition 3D imaging as the surgeon operates the endoscopic camera. It improves accuracy through motion scaling and tremor filtering, which reduce the surgeon’s hand movement, providing more precise control and ensuring smooth and precise actions. Surgeons work from a comfortable seated position (reducing fatigue and strain) while operating robotic arms that provide greater range, flexibility and access to hard-to-reach areas. The Ion is a less expensive robotic surgical system used specifically for minimally invasive lung biopsies.
Da Vinci: the classic razor and blade income model
Intuitive Surgical uses the classic razor and blade revenue model with a few twists. In this model, the company sells a base product (the razor) at a low price or even free in order to generate recurring revenue from the sale of ongoing consumable products (the blades). The twist is that the da Vinci system (razor) costs between $500,000 and $2 million, which is a significant investment and hardly “cheap.” Surgical instruments and accessories (blades) used with the system, as well as service and maintenance contracts, provide a recurring revenue stream.
Intuitive Surgical sold $5.08 billion of instruments and accessories in 2024, up 19% year-over-year (YoY), driven by procedure volumes. The more operations are performed, the more instruments and accessories need to be replaced. Significant investments by hospitals in purchasing the da Vinci system and training its staff also create a locking effect when moving to a competitor such as Zimmer Biomet Holdings Inc. New York Stock Exchange: ZBH or a leading medical device manufacturer Medtronic PLC New York Stock Exchange: MDT.
In 2024, more than 2.68 million procedures were performed with da Vinci.
MarketRank™ Intuitive Surgical Stock Analysis
- Overall MarketRank™
- 92nd percentile
- Analyst rating
- Moderate purchase
- Pros/cons
- 8.3% Minus
- Short interest level
- Healthy
- Dividend Power
- N/A
- Environmental assessment
- -1.15
- Mood News
- 1.10
- Insider trading
- Sale of shares
- Project Profit Growth
- 15.38%
See full analysis
On January 15, 2025, Intuitive Surgical provided preliminary results for the fourth quarter of 2024. The company expects revenue of $2.41 billion, beating analysts’ consensus estimate of $2.2 billion. The company’s instruments and accessories (blades) revenue rose 23% year over year to $1.41 billion, driven by higher procedure volume da Vinci and Ion. Da Vinci procedure volume grew 18% YoY in the fourth quarter and 17% YoY in 2024 to nearly 2,683,000.
Systems sales in the fourth quarter rose 36% to $655 million, compared with $480 million in the same period last year. The company has deployed 468 da Vinci systems, including 174 da Vinci 5 systems. Customers can buy them outright or rent them on a pay-as-you-go basis. In the fourth quarter of 2024, 222 systems were placed under operating lease, of which 140 were pay-as-you-go.
The only drawback: a slowdown in the volume of procedures is expected in 2025
Unlike during the pandemic, Intuitive Surgical did not experience disruptions in procedure volumes despite the resurgence of COVID-19 infections. Underlying demand for procedures is strong, with the United States experiencing 19% growth and international procedure volume up 23% YoY. The total volume of procedures in 2024 increased by 17% compared to the same period last year. However, the company expects global procedure volume to slow to 13-16% YoY in 2025. Could they be underestimating growth rates? The market thinks so, and in the days that followed, shares rose nearly 10% to record highs.
ISRG launches pennant breakout
A pennant is a symmetrical triangle that forms at the end of a sharp uptrend. A symmetrical triangle consists of a descending (falling) upper resistance line converging with an ascending (rising) lower support line at the top. A breakout occurs when a stock rises above the upper trend line resistance line. A breakout occurs when a stock falls below the lower support line of the trend line. A breakout or breakdown becomes noticeable as the stock approaches a top and the channel narrows.
ISRG peaked at $556.23, forming a pennant pattern consisting of a descending upper resistance line and an ascending lower support line. The daily flat support VWAP is $530.08. The upgrade to fourth-quarter revenue guidance sent the stock above its upper trend line, triggering a pennant breakout. The daily RSI has risen to the 72-bar level. However, the company still needs to announce its fourth-quarter 2024 earnings in full, as well as provide guidance for the future. This hinted at global procedure volume growth slowing to 13-16% YoY in 2025. Fibonacci (Fibonacci retracement support levels are located at $568.42, $515.51, $497.15 and $471.35.
ISRG stock average target price 6.5% lower $554.17, and his highest analyst price target is at US$650. Analysts have 15 buy ratings, three hold ratings and one sell rating. The short interest on the stock is 1.24%.
Actionable Option Strategies: Bullish investors should wait for reaction to the actual 2024 fourth quarter earnings report and consider using cash-backed puts at Fibonacci retracement support levels to buy the dip. If the stock is allocated, then writing covered calls at high Fibonacci levels implements a wheel strategy to generate income.
Before you think about intuitive surgery, you need to hear this.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts are quietly whispering to their clients to buy now, before the broader market takes hold… and Intuitive Surgical wasn’t on the list.
While Intuitive Surgical currently has a Moderate Buy rating among analysts, the top-rated analysts think these five stocks are Strong Buys.
View five stocks here
Want to earn income from your stock portfolio? Use these ten stocks to create a safe and reliable source of investment income.
Get this free report