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Intuitive Surgical Surges Ahead: New Robotic Platform Broadens Its Reach

The new platform, da Vinci Xi, should bring robotic surgery to new surgical areas and reinforces Intuitive's wide moat rating and positive moat trend.


 Intuitive Surgical's (ISRG) April 1 announcement of Food and Drug Administration clearance of its new robotic surgical platform, da Vinci Xi, was well-received by the marketplace, with the shares up significantly on the news. We understand investors' enthusiasm regarding this approval, as the new system builds on the existing portfolio of da Vinci products and should allow robotic surgery to make inroads into a number of underpenetrated surgical areas. We anticipate that this platform will be well-received by several surgical specialties, particularly general and cardiovascular surgeons, and has the potential to reverse the recent trend of the significant growth deceleration in system placements.

The Xi rollout also reinforces our wide moat rating and positive moat trend, which are predicated largely on Intuitive extending its technological superiority, penetrating markets previously untapped, and maintaining its monopolistic competitive positioning. However, we're not making any changes to Intuitive's valuation on the news, as our long-term growth trajectory implies growth in procedures that presented a challenge for Intuitive's da Vinci Si platform. To deliver double-digit growth in procedures for the next five to 10 years, as we forecast, Intuitive had to offer a meaningful upgrade from the Si to the surgical community, and considering that the company has a habit of rolling out new platforms every three to five years, the Xi's launch shouldn't come as a particular surprise.

Alex Morozov does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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