Key Points
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Intuitive Surgical had double-digit revenue and earnings growth in the first quarter.
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The stock is down more than 30% so far this year.
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The company is seeing a solid launch of its da Vinci 5 robotic surgical system.
- 10 stocks we like better than Intuitive Surgical ›
Intuitive Surgical (NASDAQ: ISRG) is scheduled to report earnings after the market closes on July 16. The robotic healthcare stock has suffered so far this year, falling a little more than 30%, despite a strong first-quarter earnings report.
Positioning a trade or an investment right before an earnings report always carries a bit of event risk, but the current setup for Intuitive Surgical presents a compelling bull case.
It’s worth noting that the stock has a recent history of earnings beats, bettering analysts’ predictions in each of the past four quarters. If Intuitive reports better earnings than the current predictions of $2.81 billion in revenue and $2.48 in earnings per share (EPS), the stock will likely go up. However, it’s important to take a longer view of the company’s potential if you’re planning on investing.
Here are three reasons why Intuitive Surgical’s stock is a good long-term buy:
The price is right, for now
While Intuitive historically commands a premium multiple due to its absolute dominance in robotic surgery, the stock’s sell-off this year has driven its forward price-to-earnings (P/E) multiple down to around 36x. That’s a stark discount to its 5-year historical average of more than 58 times forward P/E. This compression offers a much more attractive entry point into a company where more than 80% of revenue is highly durable and recurring, from instruments, accessories, and services.
In the first quarter, recurring revenue from instruments and services grew 23% year over year to $2.12 billion. The increase in instruments and accessories revenue was primarily driven by approximately 16% growth in da Vinci procedure volume, customer buying patterns, and approximately 39% growth in Ion procedure volume.
Once a hospital installs a machine, it is effectively locked into the Intuitive ecosystem, creating a powerful, reliable revenue stream for investors.
It’s worth noting that in the first quarter, revenue and EPS both grew by double-digit percentages, with revenue reported as $2.77 billion, up 23% year over year, and EPS of $2.28, up nearly 19% over the same period a year ago.
One reason for pessimism among investors is that GLP-1 obesity drugs are lowering bariatric surgical volumes. However, Intuitive is making up for that with the growth in other medical procedures performed using its systems. The other concern is that the company is now promoting a longer lifespan for its instruments to lower hospital costs, but while that may cut down on revenue from instruments and accessories, it also builds customer loyalty and improves the company’s moat.
Its da Vinci 5 system is seeing a nice uptake
The central near-term driver for Intuitive is the rollout of its next-generation da Vinci 5 system. Early data show that hospital utilization of the da Vinci 5 is roughly 11% higher than the legacy Xi platform. Because customer adoption has moved faster than expected, the accelerating trade-in and upgrade cycle serves as a major fundamental catalyst that could drive an upside surprise in system placements and forward guidance.
The first quarter 2026 da Vinci surgical system placements included 232 da Vinci 5 systems, compared with 147 in the first quarter of 2025.
The launch of the da Vinci 5 platform introduces true hardware-enabled artificial intelligence and Force Feedback technology, which provide surgeons with a physical sense of resistance and tissue pressure for the first time. Beyond just a near-term upgrade cycle, this establishes the technology baseline for the next decade of surgery. It also creates a massive technical barrier that newer competitors will find difficult to replicate.
Expansion into diagnostics and soft tissue treatment
For years, the company focused strictly on treating disease through general surgery with the da Vinci platform. With its Ion platform, it is moving upstream to own the diagnosis and early intervention stage as well.
The spearhead of this diagnostic expansion is the Ion endoluminal system, a robotic bronchoscopy platform designed for minimally invasive lung biopsies. Ion uses an ultrathin, highly flexible robotic catheter.
Ion feeds Intuitive’s high-margin recurring revenue model. Each procedure requires single-use flexible needles, vision probes, and patient-specific 3D planning software. Furthermore, Intuitive is currently integrating adjunctive diagnostic technologies such as endobronchial ultrasound (EBUS) directly into the Ion workflow to increase revenue per procedure.
Intuitive is also deepening its moat in soft tissue treatment through its da Vinci SP (Single Port) platform. While the da Vinci 5 requires multiple small incisions across the abdomen, the SP platform allows an entire surgical team of camera and instruments to enter through one single 2.5-centimeter incision or a natural orifice. The SP platform is rapidly gaining traction in urology and transoral otolaryngology (head and neck surgeries), driving high-volume procedure growth.
So Intuitive Surgical looks undervalued heading into the Q2 report. For those with a multi-year horizon, the setup looks favorable.
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James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.
