Surgeries are scary for lots of reasons, not least because of harm to tissues and the time needed to recover. But this is changing with the help of robots. Intuitive Surgical (NASDAQ:ISRG), a leader in robotic surgery thanks to the da Vinci Surgical System, which has made a big splash in healthcare.
The new technology leads to smaller incisions, lowers blood loss, and makes hospital stays shorter. By the end of the fiscal 2024 fourth quarter, Intuitive Surgical’s financials revealed solid growth. Worldwide, da Vinci procedures increased by 18% compared to the final quarter of 2023.
The increased adoption of ISRG robots has led to a share price pop to the tune of 49% over the past year, but will it continue?
Peer-Reviewed Research Validating da Vinci
Intuitive Surgical installed 493 da Vinci surgical systems in Q4 2024, a noteworthy increase versus the 415 systems placed during the same time last year. Of the total, 174 were the da Vinci 5 models, highlighting strong interest in the company’s newest technology improvements.
By December 31, 2024, da Vinci had in place a total of 9,902. This is about 15% more than 8,606 systems at the end of 2023.
The company’s footprint is growing in Europe too. Management is building a direct presence in Italy, Spain, Portugal, Malta, and San Marino thanks to purchases of the da Vinci and Ion distribution systems in these areas.
One strong reason for the broad adoption of Intuitive Surgical da Vinci systems is the peer-reviewed research that stands as a testament to its success. For example, an important meta-analysis published in the peer-reviewed Annals of Surgery shined a light on the advantages of robotic-assisted surgeries.
The analysis covered a period of 12 years and looked at 230 studies from 22 different countries, including more than one million surgical procedures across seven types of cancer surgeries. The findings showed that Intuitive’s da Vinci system did much better than traditional laparoscopic and open surgeries.
The company also received approval from the U.S. Food and Drug Administration. A label change for da Vinci X and Xi systems regarding radical prostatectomy was approved, backed by evidence gathered between 2007 and 2014.
This information presents that outcomes from robotic-aided radical prostatectomy over a second five to ten years are not different from non-robotic ways. It demonstrates the system is positive for having good survival rates for an extended period.
Does ISRG Ever Stop Growing?
ISRG is one of those really astonishing companies that just about never stops growing. We went back a full 10 years and in only two quarters did management report a sales dip year over year. Those came in the first and second quarters of 2020, but before and since the top line has delivered year-over-year growth with remarkable consistency.
For the fourth quarter, Intuitive Surgical’s total revenue increased by 25.2% year-over-year to $2.41 billion. Non-GAAP gross profit grew 28% from the year-ago value to $1.68 billion and non-GAAP income from operations rose 49.4% from the prior year’s quarter to $927.70 billion.
As of December 31, 2024, cash, cash equivalents, and investments stood at $8.83 billion, up from $7.34 billion on December 31, 2023 while total assets came in at $18.74 billion versus $15.44 billion on December 31, 2023.
Profitability Metrics On The Rise
If you’re wondering how ISRG has amassed such a rich cash pile, the short answer lies in the extraordinary profitability of the firm.
Each and every quarter, earnings before interest and taxes have been positive to the tune of hundreds of millions of dollars for just about every quarter. Most recently, EBIT was $756.1 million.
Intuitive Surgical’s trailing-12-month gross profit margin of 67.46% is 16.5% higher than the industry average of 57.93% while its trailing-12-month EBITDA margin of 33.51% is 475.3%, higher than the sector average of 5.82%.
Has ISRG Stock Run Too Fast Too Fast?
Having run higher by almost 50% in the past 12 months, there’s an argument to be made that the stock has run too far too fast. A discounted cash flow forecast analysts would suggest this with fair value of $429 per share calculated on a 5-year term. The company’s 87x price-to-earnings ratio is also highly elevated.
For Q1 2025, analysts are predicting that the company’s top line and earnings per share will grow by 15.6% and 16.2% year-over-year to $2.19 billion and $1.74, respectively.
The company has surpassed consensus expectations for both revenue and EPS in all four previous quarters.
For the fiscal year 2025 second quarter, ending in June, analysts forecast the company’s revenue and EPS will increase by 16.3% and 10.6% compared to last year. They estimate revenue will be $2.34 billion and EPS will be $1.97, respectively.
Why Is Intuitive Surgical Stock Surging?
Intuitive Surgical stock has been going up thanks to a sharp rise in daVinci systems and a growing footprint in Europe.
The need for minimally invasive care is rising all over the world, and Intuitive Surgical is capitalizing on demand for more automation. This year alone, shares went up by around 9% but analysts see more room for new buyers with intrinsic value pegged at $629 per share. If they are correct, that leaves room for another 11.9% hike in share prices.
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