Recent share performance and business scale
Recent trading in Intuitive Surgical (ISRG) has drawn attention after a one-month return of about a 5% decline and a past three-month return of about a 19% decline, against a market value near US$166.9b.
The company generates about US$10.1b in annual revenue and US$2.9b in net income, primarily from its Surgical & Medical Equipment operations. This provides investors with a sizeable, established player in minimally invasive care to evaluate.
See our latest analysis for Intuitive Surgical.
At a share price of US$468.55, Intuitive Surgical has seen momentum cool recently, with a 7 day share price return of a 2.37% decline and a year to date share price return of a 16.63% decline. However, the 3 year total shareholder return of 86.45% and 5 year total shareholder return of 88.02% highlight how long term holders have experienced a very different outcome to recent traders.
If you are comparing Intuitive Surgical with other names using robotics and automation in healthcare, this is a useful moment to scan the wider opportunity set through the 32 robotics and automation stocks
So with the share price cooling after strong multi year total returns, and annual revenue of about US$10.1b and net income of about US$2.9b, is this weakness a fresh entry point, or is the market already pricing in future growth?
Most Popular Narrative: 12% Undervalued
At the last close of $468.55, the most followed narrative on Intuitive Surgical points to a fair value of about $532.46, which frames the recent pullback in a very different light.
Over the next 5 years I calculate with (actual values from 18.01.26, price/shr at 533 USD): Revenue Growth p.a.: 12% (Currently at 14.7%), we saw the peak of revenue growth with nearly 15%, now even 12% is sporty, but with the “abo like” revenues from spare parts and software licences, based on a still growing bases of installed systems, realistic. Profit Margin: 30% (currently at 28.6%), because spare parts in general have more margin than system sales, and the sales out of spare parts is still growing. Future PE: 50 (currently at 69), the high PEs are typical for fast growers, but over time the PE will go down, I see for next 5 years 50, in 10 years it could come down to 40. Interest rate: 6.77% (same as current)
This narrative, from user Tokyo, leans on steady revenue expansion, higher margin mix and a slimmer profit multiple to back into that fair value. Want to see how those moving parts, from projected earnings to the chosen discount rate, pull together into a single number that still sits above today’s share price? The full piece lays out the detailed assumptions behind that 5 year roadmap.
Result: Fair Value of $532.46 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this fair value story can be challenged if procedure volumes or recurring instrument and service revenue soften, or if the high current P/E multiple compresses faster than expected.
Find out about the key risks to this Intuitive Surgical narrative.
Another view on what the market is paying for ISRG
Tokyo’s fair value of $532.46 sits against a very different message from market multiples. At a P/E of 58.3x, Intuitive Surgical trades well above the US Medical Equipment industry at 27.7x, the peer average at 31.9x and even our fair ratio of 37.9x. This points to clear valuation risk if sentiment cools.
To see how this pricing gap could evolve as expectations change, take a closer look at the detailed valuation breakdown that underpins that fair ratio view through the See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
With sentiment mixed across recent returns and valuation signals, this is a good moment to act quickly and check the underlying rewards yourself by reviewing the 3 key rewards
Looking for more investment ideas?
If you only stop at one company, you risk missing other opportunities that might suit your style better, so widen your search before making your next move.
- Target stability first and let price come second by checking out 69 resilient stocks with low risk scores that keep risk scores in tighter territory.
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- Build a watchlist of future candidates by reviewing the screener containing 25 high quality undiscovered gems that have strong underlying numbers but less market attention.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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