Company Reports

Intuitive's first quarter was ahead of our full-year expectations for procedure growth, but we're maintaining our fair value estimate as other drivers were largely in line with our model. We're maintaining our wide moat rating.

Intuitive Surgical continues to benefit from the ongoing global adoption of robotic surgery, even in the procedures we didn't view as likely to convert. Our long-term positive view about the company's competitive positioning is unchanged even as new competitors have finally arrived on the scene, and with the release of the next-generation platform, Intuitive should maintain its dominance.

As Intuitive Surgical prereleased key figures earlier in the month, there were no surprises in the fourth-quarter results. The main highlight was the company's announcement of the submission to the U.S. Food and Drug Administration for the fifth generation of the da Vinci platform, which could be approved later in the year. We're updating our model for the year-end financials and expect to publish the new report shortly. We're maintaining our wide moat rating.

Unsurprisingly, recent developments in weight loss drugs (GLP-1) and the resulting effect on weight-loss surgery dominated Intuitive Surgical's third-quarter earnings call despite bariatric procedures representing less than 5% of the total. While it is reasonable to assume that our and the market's prior expectations around bariatric penetration for robotics are too optimistic in light of the recent significant developments in weight loss therapies, this has little effect on our assumptions. We maintain our wide moat rating and $230 fair value estimate, but even with the stock pullback, shares remain in overvalued territory.

Intuitive Surgical fared remarkably well during the pandemic even as many hospitals struggled with tight capital budgets and elective surgeries were almost nonexistent during the COVID-19 peak. Now, with things returning to normal, the company is set to resume its march toward global adoption of robotic surgery. Our long-term positive view on the company's competitive positioning is unchanged, even as new rivals are entering the previously monopolistic area of robot-assisted surgery.

Intuitive Surgical delivered another quarter of material procedures growth, allowing it to raise its procedures guidance modestly. We are raising our fair value estimate to $230 to account for a healthy 2023. The company's wide moat is intact.

While we were expecting solid midteens growth in procedures for fiscal 2023, Intuitive Surgical's first-quarter results easily surpassed our expectations with 26% growth globally. This allowed the company to raise its procedures guidance materially, from 12%-16% to 18%-21%. We are updating our model to account for this massive surprise on the upside and expect a modest increase in our $204 fair value estimate for this wide-moat business.

The single remark by Intuitive Surgical's CEO regarding the next-generation system appears to be the market's sole focus, with shares down following the fourth-quarter results. To us, the unequivocal, "no new multi-port system launch in 2023," at least provides some visibility into Intuitive's development plans, and as we weren't explicitly baking in any major systems revenue uplift due to the new platform launch in 2023-24, we largely maintain our key forecast drivers and our fair value estimate. Shares of this wide-moat firm are slightly overvalued at current levels.

As was the case with many growth companies, Intuitive's shares had been battered earlier in the year, down nearly 50% off their peak. Aside from the general rerating of high-growth firms, the market was also digesting Intuitive's revenue growth deceleration, which was mainly attributable to declining systems placements. With expectations around a systems growth reset (a trend we've been highlighting for quite some time now), the company's third-quarter results should be viewed favorably as many key value drivers for the business remain intact. As shares currently trade in 3-star territory, valuation is no longer unreasonable. We maintain our wide moat rating and $204 fair value estimate.

While wide-moat Intuitive's systems sales decline is in the headlines, we've been vocal about near-term challenging dynamics for da Vinci placements, and incorporated them in our forecasts. Thus, the second-quarter results aren't leading to any changes in our valuation. Our focus remains on the three key drivers of long-term value creation for the company: procedure growth (that was strong in the quarter), systems utilization trends (that continue to suggest growing adoption among existing customers), and investment deployment (that is proceeding as planned).

Intuitive Surgical fared remarkably well during the pandemic even as many hospitals struggled with tight capital budgets and elective surgeries were almost nonexistent during the COVID-19 peak. Now, with things returning to normal, the company is set to resume its march toward global adoption of robotic surgery. Our long-term positive view on the company's competitive positioning is unchanged, even as new rivals are entering the previously monopolistic area of robot-assisted surgery.

For us, procedure growth is the primary factor when assessing Intuitive's competitive positioning and long-term growth prospects. Thus, we call the firm's first quarter a relative success. Procedures, even despite minor omicron-related delays, were up 19% in the quarter globally and 16% in the U.S., which allowed Intuitive to slightly raise its procedure guidance. Most of the questions on the conference call, however, were about capital placements, which we have long assumed will continue to decelerate, which they did in the quarter. We maintain our full-year forecast and our fair value estimate for the firm. Our wide moat rating is unchanged.

Having already prereleased its fourth-quarter results, Intuitive’s announcement on Jan. 20 wasn’t particularly surprising. The company’s 2022 procedure growth guidance of 11%-15% is conservative and reflects uncertainty around hospital capacity. We maintain our valuation and wide moat rating on the company.

We are maintaining our $182 fair value estimate for wide-moat Intuitive Surgical following management’s preliminary fourth-quarter and fiscal 2021 results ahead of the full earnings release on Jan. 20. Intuitive’s preliminary fourth-quarter revenue grew approximately 17% to $1.55 billion as worldwide da Vinci procedures increased by about 19% year over year. The company’s solid fourth quarter resulted in fiscal 2021 revenue of approximately $5.71 billion that grew at a compound annual growth rate (CAGR) of approximately 13% between 2019 and 2021 while the worldwide procedure volumes’ CAGR over the same period was approximately 14%. These preliminary results are in line with our model’s forecasts. We view shares as overvalued.

While the coronarvirus-marked 2020 was a challenging year for Intuitive Surgical, we anticipate it will be nothing but a small blimp on its radar. With patient volumes across the globe starting to show signs of recovery and hospitals budgets slowly unfreezing, focus once again turns to daVinci and its continuing adoption across all areas of soft tissue surgery. Our long-term positive view on the company's competitive positioning remains unchanged, even as new rivals are entering the previously monopolistic area of robot-assisted surgery.

We are maintaining our fair value estimate of $175 for wide-moat Intuitive Surgical following third-quarter results and preliminary data from the Ion endoluminal system’s multicenter clinical trial, Precise. We currently view shares as overvalued.

While the coronarvirus-marked 2020 was a challenging year for Intuitive Surgical, we anticipate it will be nothing but a small blimp on its radar. With patient volumes across the globe starting to show signs of recovery and hospitals budgets slowly unfreezing, focus once again turns to daVinci and its continuing adoption across all areas of soft tissue surgery. Our long-term positive view on the company's competitive positioning remains unchanged, even as new rivals are entering the previously monopolistic area of robot-assisted surgery.

Intuitive Surgical continued on the strong procedure recovery path in the second quarter, particularly in the United States, which led the firm to revise once again its full-year procedure guidance to 27%-30%, up 450 basis points from the previous midpoint level. We are raising our fair value estimate to $525 per share to reflect stronger-than-expected procedure growth acceleration, but still consider shares to be materially overvalued at current levels. Our wide moat rating is unchanged.

While the pandemic-marked 2020 was a challenging year for Intuitive Surgical, we anticipate it will be nothing but a small blimp on its radar. With patient volumes across the globe starting to show signs of recovery and hospitals budgets slowly unfreezing, focus once again turns to daVinci and its continuing adoption across all areas of soft tissue surgery. Our long-term positive view on the company's competitive positioning remains unchanged, even as new rivals are entering the previously monopolistic area of robot-assisted surgery.

Intuitive Surgical's strong growth in procedures in the first quarter was the most surprising development in its performance. With a 17% year-on-year recovery, procedures now have returned to the prepandemic level, and the company's confident guidance for a 22%-26% growth in full-year procedures implies significant pent-up demand. We updated our model for the first quarter and incorporated new assumptions for the pace of procedure bounceback; as a result we are raising our fair value estimate to $500 per share. We maintain our wide moat rating for the firm.