Intuitive Surgical (ISRG), valued at $177 billion, is a medical technology company best known for its da Vinci Surgical System. It has long held a monopoly on the robotic surgery market with the da Vinci systems, a robotic platform that helps surgeons perform minimally invasive surgeries. Its success is based on a two-decade-old ecosystem of surgeon loyalty, hospital dependency, and technological supremacy. During the same period, the stock returned more than 6,330%.
With advancements in artificial intelligence (AI), Intuitive can now further develop its system, solidifying its unbreakable moat. Let us see if the stock is currently a buy.
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Intuitive’s da Vinci system is an advanced robotic system that allows surgeons to operate through small incisions using robotic arms and a 3D high-definition camera, giving them greater precision, control, and vision. These minimally invasive surgeries result in fewer complications, shorter hospital stays, and faster recovery times. Intuitive’s business model includes not only selling these systems but also earning recurring revenue from sales of system-related instruments and accessories, as well as surgeon training programs.
In the most recent second quarter, global da Vinci procedures increased 17% year over year. The company installed 395 da Vinci systems in Q2, including 180 da Vinci 5 systems, its fifth-generation robotic system, which the company launched in 2024. Total revenue increased by 21% to $2.44 billion, with adjusted earnings up 23% to $2.19 per share.
Despite an increase in the average selling price (ASP) of da Vinci systems from $1.44 million to $1.5 million, systems revenue increased by 28% due to increased placements and demand for the company’s latest da Vinci platforms. This reveals that hospitals are prioritizing investments in Intuitive’s cutting-edge surgical platforms, despite broader capital expenditure constraints in some global markets. Additionally, instruments and accessories revenue also rose by 18% YoY to $1.47 billion.
One standout performer in the quarter was the SP (Single Port) platform, which grew procedures by 88% year on year. It is used in confined anatomical spaces and complex cases such as colorectal or head and neck surgeries, where traditional multiport robotic systems may fail to function. In the second quarter, Intuitive placed 23 SP systems.
Additionally, the Ion system, Intuitive’s robotic-assisted platform for minimally invasive lung biopsies, saw a 52% increase in procedures to 35,000, with an installed base of 905 systems. Despite macroeconomic uncertainty and rising trade tensions, gross margins remained at 67.9%. The company repurchased $181 million worth of shares and spent $155 million in capex, yet grew its cash reserves to $9.5 billion.
Looking ahead, the company intends to launch da Vinci 5 globally. Intuitive is well-positioned to execute, with a healthy balance sheet, recurring revenue model, and strong free cash flow.
Intuitive has a two-decade headstart in the field of robotic surgery. According to GlobalData, Intuitive held 60% of the global robotic surgery market in 2024. This market, which was valued at $2.9 billion in 2024, is expected to reach $9.2 billion by 2034. Intuitive has installed over 11,000 da Vinci systems across 74 countries.
Bringing a robotic system to market requires years of research and development, surgeon partnerships, billions of dollars, and regulatory hurdles. Even if a new entrant or an established player attempts to enter this space, they must show clinical efficacy, safety, and training scalability at a level that matches Intuitive.
Rivals with deep pockets have developed alternatives. Notably, Medtronic (MDT) with its Hugo system, Johnson & Johnson (JNJ) with its Ottava surgical system, and Stryker (SYK) with its Mako system have all attempted but failed to gain market share. This is due in part to hospitals and surgeons being locked into the da Vinci ecosystem, where they have invested a significant amount of money to purchase these systems and train their surgeons. Once trained, switching platforms is costly and risky. That’s what makes the moat so unbreakable.
Besides the da Vinci, Intuitive has expanded its reach into pulmonology, colorectal, thoracic, and head-and-neck surgeries with Ion, SP, and staplers, creating a diversified model. Overall, Intuitive is a growth stock with decades of innovation, operational excellence, and a moat based on technological superiority and clinical outcomes that competitors will find difficult to replicate.
On Wall Street, overall, Intuitive stock is a “Moderate Buy.” Out of the 28 analysts that cover the stock, 18 rate it a “Strong Buy,” two suggest a “Moderate Buy,” seven rate it a “Hold,” and one says it is a “Strong Sell.” The average target price of $602.96 is 21% above current levels. The high price estimate of $675 implies 36% upside over the next 12 months.
Despite its unbreakable moat and excellent long-term growth prospects in the robotic surgery market, ISRG stock is currently trading at a premium of 60x forward earnings. Risk-averse investors can start accumulating shares around the $400 level to invest with a margin of safety.
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On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
