Categories Analysis, Health Care

Why Intuitive Surgical (ISRG) is a must-own stock after the recent dip

In the fourth quarter, adjusted net profit climbed to $1.30 per share, aided by a double-digit increase in revenues

The pandemic had a mixed impact on the healthcare sector. The high demand for COIVD care services sent medical facilities into overdrive, while the cancellation and postponement of elective procedures slowed down the sales of medical devices. Intuitive Surgical Inc. (NASDAQ: ISRG) managed to come out of the virus-induced slump pretty quickly, thanks to the growing adoption of its proprietary robotic surgical system.

Like most Wall Street stocks, the market selloff triggered by the Russia-Ukraine conflict has reduced Intuitive’s market share considerably. This week, the stock traded down 23% from its November peak, easing concerns over its high valuation. The downturn is temporary and the stock is probably on its way to regain the lost ground, though at a moderate pace. Experts see ISRG gaining about 17% in the next twelve months.


The company is a leading player in an industry with great growth potential, and its performance during the pandemic has been impressive, mostly staying unaffected by the widespread disruption of business activity. It makes sense to buy the stock now, making use of the opportunity that doesn’t come very often. The business will continue to thrive in the foreseeable future, mainly on the strength of the company’s minimally invasive surgical system, da Vinci. Also, it has a strong balance sheet, marked by a cash balance of more than $8 billion at the end of FY21.

Read management/analysts’ comments on Intuitive’s Q4 2021 earnings call transcript

From Intuitive Surgical’s Q4 2021 earnings conference call:

“Over the past five years, the annual number of instruments we produce has grown roughly 200% and the annual number of systems we produce has more than doubled. The number of customer professionals trained annually has nearly doubled and our engineering staff has nearly tripled. Our product volume growth has also allowed us to in-source some of our high-volume accessories while investing in automation. This has a three-fold benefit, improving supply chain robustness, improving manufacturing quality, and lowering unit costs.”

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da Vinci Power

Continuing the recent trend, the company’s key financial metrics performed better than widely expected in the final three months of fiscal 2021. Fourth-quarter net profit, excluding one-off items, climbed to $1.30 per share from $1.19 per share a year earlier. There was a 17% growth in net revenues to $1.55 billion, which also topped Wall Street’s expectations.

Aided by a sharp increase in surgical procedures in the U.S. during the quarter, despite the resurgence in COVID-19 cases during that period, the total da Vinci procedure increased in double digits. There was an 18% increase in the shipments of da Vinci systems, while total installed bases rose 12% year-over-year.

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Intuitive’s stock closed the last session slightly above $280 and traded higher in early trading on Friday. It has lost around 20% in the past six months.

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

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