We came across a bullish thesis on Intuitive Surgical, Inc. (ISRG) on Substack by Kontra Investment Xchange. In this article, we will summarize the bulls’ thesis on ISRG. Intuitive Surgical, Inc. (ISRG)’s share was trading at $542 as of Nov 29th. ISRG’s trailing and forward P/E were 87.14 and 69.93 respectively according to Yahoo Finance.
Close-up of a robotic endoluminal surgery device performing a procedure in an operating room.
Intuitive Surgical stands as a pioneer in the robotic surgery market, renowned for its flagship da Vinci Surgical System, which enables precision-driven, minimally invasive procedures. The system, comprising a surgeon’s console, patient-side cart, and advanced vision system, is complemented by an ecosystem of instruments and accessories. With a steadily growing market fueled by expanding applications of robotic techniques, Intuitive is strategically positioned to benefit from mid-teens growth in this sector. Headquartered in Sunnyvale, California, the company generates revenue across three primary segments: Instruments and Accessories, Systems, and Services.
By Q3 2024, Intuitive reported an 18% year-over-year increase in procedures, alongside a 15% growth in its installed base of da Vinci systems, placing 379 new units during the quarter. This growth underscores the recovery in procedure volumes and system placements following COVID-19 disruptions. Despite these gains, robotic surgery’s global penetration remains relatively low, signaling significant potential for long-term adoption. Intuitive is expanding the scope of its da Vinci systems while introducing newer, less invasive platforms, which align with its vision of creating a fully integrated care delivery model. The integration of AI into both its instruments and systems further enhances the growth outlook, strengthening its position as a leader in innovation.
While the stock’s premium valuation may give pause, it reflects the company’s robust growth prospects and its ability to capitalize on the untapped potential of robotic-assisted surgery. Risks include rising competition from other medtech companies launching similar systems and the possibility of reduced pull-through sales from extended instrument use. However, Intuitive’s entrenched market leadership, coupled with its commitment to advancing surgical technology, provides a strong foundation for sustained growth. The structural runway for robotic surgery adoption remains ample, and Intuitive is well-equipped to maintain its dominance, making it a compelling investment in the evolving healthcare landscape.
Intuitive Surgical, Inc. (ISRG) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 82 hedge fund portfolios held ISRG at the end of the third quarter which was 67 in the previous quarter. While we acknowledge the risk and potential of ISRG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ISRG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.