With a Notable Yearly Increase of Around 62%, Will Intuitive Surgical's Shares Continue to Climb?
Intuitive Surgical's stock has been on a rollercoaster ride lately, with shares skyrocketing by an impressive 62% over the past year. This eye-catching performance has left many investors pondering if it's still a worthwhile investment. Let's dive into why Intuitive Surgical's share price has soared and if it's still a good buy.
Trying, Testing, and Buying New Tech
In January 2025, Intuitive Surgical shared some preliminary fourth-quarter results, sparking investor interest. Their da Vinci surgical robot system has become a popular choice for hospitals worldwide, with 493 units placed during the third quarter of 2024. Of these, 174 were new da Vinci 5 systems, the company's latest and most advanced machine to date.
Pricey, yes, but hospitals are not shying away from this highly-priced tech. New da Vinci 5 systems cost between $2 million and $2.5 million, yet hospitals continue to invest.
Intuitive Surgical's latest innovation may give it an edge over the competition. Unlike other players in the market, such as Stryker, da Vinci 5 integrates visualization and various features into a single tower. This streamlined design may be an attractive selling point for hospitals seeking to optimize their operating rooms.
Moreover, buyers are not just purchasing surgical systems; they're also splurging on a plethora of replacement instruments following each procedure. Quarter four saw a whopping 23% increase in instrument and accessory sales, amounting to a whopping $1.4 billion, or 58.5% of the total revenue.
More Procedures, More Revenue
Intuitive Surgical also shared guidance for 2025, hinting at promising prospects. The company reported an 18% increase in da Vinci procedure volume in 2024, which management expects to moderate slightly in 2025 to a range of 13% to 16% growth.
Given Intuitive Surgical's role as the exclusive supplier of the instruments and accessories needed for da Vinci 5 robots, the company holds substantial pricing power. With procedure volume growth likely to outpace instrument and accessory sales by a few percentage points, this revenue stream is expected to surge beyond even the projected 13-16% growth rate.
A Swanky Price Tag
Intuitive Surgical's swanky price tag of 77 times forward-looking earnings may raise some eyebrows. Notably, medical technology titan Johnson & Johnson has plans to enter the robot-assisted surgery market with its Ottava robotic surgical system. This potential competition makes some wonder if Intuitive Surgical's high valuation is unwarranted.
However, others believe that Intuitive Surgical's leading position in the robot-assisted surgery market justifies its high valuation. Buying a new robot-assisted surgery system and training staff to use it are sizable expenses that many hospitals would prefer to avoid. Given this, maintaining market dominance might be an achievable goal for Intuitive Surgical.
Should You Buy Intuitive Surgical Stock?
While Intuitive Surgical's impressive sales growth, market lead in robotic surgery, and solid financial health offer compelling reasons to invest, the high valuation also raises concerns about its riskiness. Analysts both for and against argue that there are merits to be found on both sides of the investment debate. Ultimately, the decision to invest in Intuitive Surgical depends on your individual risk tolerance and long-term investment horizon.
Enrichment data integration:
- Intuitive Surgical's impressive sales growth has been robust, as demonstrated by its 25% increase in fourth-quarter revenue and a 17% jump in worldwide da Vinci procedures in 2024[2].
- Given its first-mover advantage and substantial investment in research and development (R&D), Intuitive Surgical has established itself as the market leader in minimally invasive surgery[5].
- Intuitive Surgical's financial health is strong, with zero debt and a cash reserve of $8.8 billion[5].
- The premium pricing and declining margins present some concerns for investors looking at the stock. Analysts argue that the current stock prices might be hard to justify due to these factors[5].
- Despite the risks, optimism remains among analysts like Mike Kratky from Leerink Partners. Citing strong commercial execution and potential growth with the launch of new products like the DV5 system, analysts maintain a buy rating, suggesting that the high valuation might be justified in the long term[4].
After seeing the impressive sales growth and strong financial health of Intuitive Surgical, many investors are considering if it's a good time to invest in the company's stock. Despite the high valuation of 77 times forward-looking earnings, some analysts believe that Intuitive Surgical's leading position in the robot-assisted surgery market justifies its price. In order to optimize their operating rooms, hospitals continue to invest in Intuitive Surgical's latest and most advanced machine, the da Vinci 5, despite its hefty price tag of between $2 million and $2.5 million.
