Intuitive Surgical's Resilience Amid Multiple Headwinds, Analyst Predicts Strong Momentum

Intuitive Surgical Inc. ISRG stock is trading higher on Friday after the robotic-assisted surgery company reported second-quarter earnings that were better than expected.

William Blair writes, “All this comes in spite of several headwinds—China macro/anticorruption efforts, South Korea physician strikes, worsening bariatric volumes, and a somewhat strained supply chain—emphasizing the underlying momentum of the business and pointing to upside potential as these headwinds stabilize/improve through 2024 and especially into 2025.”

The analyst adds the momentum remains strong due to the support of general surgery in the U.S. and non-urology procedures internationally, as Intuitive Surgical’s technology extends beyond its initial applications to become the standard of care in soft tissue surgery.

William Blair notes that da Vinci 5 made up 47% of U.S. placements in the quarter, which was ahead of expectations, especially when factoring in management’s comments about a slow launch and “choppy” placements in 2024.

The analyst maintains the Outperform rating as it expects the positives will continue to outweigh the near-term headwinds and sees a solid base for five-plus years of mid-teens-plus EPS growth.

Goldman Sachs notes that growth stocks have been under pressure over the past week due to macro sector rotation and concerns about performance sustainability.

However, Intuitive’s strong second-quarter results and the likelihood of positive consensus EPS revisions should encourage investors.

Intuitive’s second-quarter results highlight significant potential for expanding robotic-assisted surgery. The company is in the early stages of developing a comprehensive care delivery model to establish robotic-assisted surgery as the standard of care.

Following a dip in gross margins next year, positive financial momentum is expected in 2026 and beyond.

Goldman Sachs adds that further robotic surgery adoption and new product launches should drive 17.0%/18.8% sales and EPS growth through 2028.

The analyst reaffirms the Buy rating, with a price target from $500 to $513.

Other analyst reactions:

• Piper Sandler maintains Intuitive Surgical with an Overweight, raising the price target from $490 to $495.
• Stifel maintains Intuitive with a Buy rating, raising the price target from $430 to $475.
• Evercore ISI keeps the In-Line rating, lowering the price target from $425 to $410.
• Baird also maintains Intuitive Surgical, increasing the price target from $487 to $503.
• BTIG reaffirms the Buy rating, raising the price target from $459 to $469.
• Truist Securities maintains the Buy rating, increasing the price target from $515 to $520.
• Morgan Stanley maintains an Equal-Weight rating, raising the price target from $460 to $475.
• JP Morgan reaffirms the Overweight rating, with a price target up from $475 to $495.

Price Action: ISRG stock is up 8.63% at $452.06 at the last check on Friday.

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Photo courtesy of Intuitive Surgical