Core Viewpoint - Intuitive Surgical Inc is significantly overvalued based on the Discounted Earnings model, with an intrinsic value of $117.38 compared to its current trading price of $479.5, resulting in a margin of safety of -308.5% [1] DCF Model Overview - The GuruFocus DCF calculator employs a two-stage model consisting of a Growth Stage and a Terminal Stage, reflecting the company's growth dynamics [1] - The Growth Stage assumes a growth rate of 11.60% over 10 years, while the Terminal Stage applies a lower growth rate of 4% for another 10 years [3] Assumptions and Calculations - The DCF model uses EPS without NRI, which is currently $6.04, and a discount rate of 10% derived from the risk-free rate plus a risk premium [2] - The intrinsic value calculated using the Discounted Earnings model is $117.38, while the DCF based on Free Cash Flow indicates an intrinsic value of $14.53, highlighting significant overvaluation [4] Growth and Discount Rates - The growth rate for the Terminal Stage is capped at 4% to ensure it remains lower than the discount rate, which is set at 10% [3] - The model prioritizes historical EPS growth rates from the past 10, 5, or 3 years, ensuring a balanced estimate [3] Conclusion - The analysis indicates that Intuitive Surgical Inc is overvalued based on both DCF methodologies, suggesting a need for caution among investors [4]

Company Performance - Intuitive Surgical, Inc. (ISRG) closed at $484.76, reflecting a -1.33% change from the previous day's close, underperforming the S&P 500's daily loss of 0.93% [1] - Over the past month, ISRG shares have decreased by 0.28%, while the Medical sector has declined by 3.08% and the S&P 500 has increased by 2.17% [1] - The upcoming earnings report is scheduled for October 17, 2024, with expected EPS of $1.65, representing a 13.01% increase year-over-year, and projected revenue of $2.02 billion, indicating a 15.57% rise from the same quarter last year [1] Annual Forecast - Zacks Consensus Estimates predict earnings of $6.67 per share and revenue of $8.1 billion for the year, showing increases of +16.81% and +13.69% respectively compared to the previous year [2] - Changes in analyst estimates are crucial as they reflect the evolving business trends, with upward revisions indicating positive sentiment towards the company's operations [2] Valuation Metrics - Intuitive Surgical, Inc. has a Forward P/E ratio of 73.7, significantly higher than the industry average of 27.63 [3] - The company holds a PEG ratio of 4.24, compared to the average PEG ratio of 2.27 for Medical - Instruments stocks [3] Industry Ranking - The Medical - Instruments industry is part of the Medical sector and currently holds a Zacks Industry Rank of 61, placing it in the top 25% of over 250 industries [4] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [4]

Company Performance - Intuitive Surgical, Inc. (ISRG) closed at $484.39, showing no change from the previous session, outperforming the S&P 500 which lost 0.19% [1] - The stock has increased by 0.43% over the past month, while the Medical sector declined by 1.58% and the S&P 500 gained 1.95% [1] - Upcoming earnings report is scheduled for October 17, 2024, with projected EPS of $1.65, a 13.01% increase year-over-year, and anticipated revenue of $2.02 billion, reflecting a 15.57% increase [1] Full Year Estimates - Zacks Consensus Estimates project full-year earnings of $6.67 per share and revenue of $8.1 billion, representing increases of 16.81% and 13.69% respectively from the prior year [2] Analyst Estimates and Valuation - Recent changes to analyst estimates indicate short-term business trends, with positive revisions suggesting optimism about the company's outlook [2] - The Zacks Rank system currently rates Intuitive Surgical, Inc. at 3 (Hold), with a Forward P/E ratio of 72.67, significantly higher than the industry average of 27.25 [3] - The company has a PEG ratio of 4.18, compared to the Medical - Instruments industry's average PEG ratio of 2.23 [3] Industry Overview - The Medical - Instruments industry is part of the Medical sector and holds a Zacks Industry Rank of 72, placing it in the top 29% of over 250 industries [4] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [4]

Core Viewpoint - Intuitive Surgical, Inc. (ISRG) is positioned for growth due to its strength in robotics and advancements in Artificial Intelligence (AI), despite facing procedure adoption risks and competition [1] Upsides - Strength in Robotics: The da Vinci surgical system is driving a shift from conventional surgery to minimally invasive procedures, with a notable increase in system placements and demand for the new da Vinci 5 system [2][3] - Strong Q2 Results: The company reported a 14% year-over-year increase in the installed base of da Vinci systems and a 2% increase in utilization rate, with expectations for procedure volume growth of 14-17% in 2024 [3][5] - Progress on the AI Front: The integration of AI in medical technologies is enhancing Intuitive Surgical's product offerings and operational efficiency, indicating a positive trend in the MedTech space [4] Downsides - Macro Challenges Continue: The company may face slower procedure growth due to soft demand for bariatric procedures and challenges in Asia, which could negatively impact top-line growth by nearly three percentage points in 2024 [6] - Supply Chain Issues: Ongoing geopolitical tensions may lead to disruptions in system placements and sales of the Ion modulation system [6] Estimate Trend - The Zacks Consensus Estimate for 2024 earnings remains stable at $6.67 per share, with revenue expectations of $8.10 billion, reflecting a 13.7% improvement from the previous year [7]

Group 1 - The article emphasizes a balanced investment strategy, advocating for a barbell portfolio with 90% in secure assets and 10% in high-alpha stocks to manage risk effectively [1] - The analysis incorporates principles from 'Superforecasting' and 'Antifragile', focusing on probabilistic forecasting and strategies that aim to minimize risk while maximizing potential gains [1] - The author integrates clinical expertise with business strategy in biotech and healthcare investment analysis, utilizing detailed risk-return charts and DCF analyses [1] Group 2 - The article does not provide exhaustive analysis or personalized investment advice, indicating that predictions are based on a probabilistic approach rather than absolute certainty [3] - It highlights the importance of independent verification of information and conducting thorough research before making investment decisions [3]

Core Viewpoint - Intuitive Surgical Inc. has shown strong financial performance and growth potential, particularly with the success of its next-generation Da Vinci 5 robotics system, but the stock appears overvalued given its current price levels [1][21][22]. Financial Performance - The company has consistently outperformed earnings expectations, with recent beats ranging from 3.02% to 40.72%, including a 14.69% beat in the latest quarter [2][21]. - In Q2 2024, Intuitive Surgical reported a 17% year-over-year increase in procedures and a 14% growth in the installed base of Da Vinci systems, contributing to a 14% increase in sales to $2.01 billion [4][5][21]. - The gross margin for the company stands at an impressive 70%, indicating strong profitability despite concerns about potential slowdowns [5][21]. Growth Drivers - The next-generation Da Vinci 5 system is a significant growth driver, featuring enhanced precision and efficiency, with a higher average selling price that supports revenue growth [7][21]. - The company is expected to see a procedure growth forecast of 15.50% to 17% for the year, indicating robust demand beyond pandemic-related backlogs [5][21]. Profitability Metrics - Intuitive Surgical boasts exceptional profitability metrics, with a gross margin of nearly 67% and an operating margin of 26%, well above industry averages [8][21]. - The company maintains a net margin of almost 28%, reflecting superior cost control and operational efficiency [8][9]. Financial Strength - The company has zero debt and a strong equity-to-asset ratio of 0.88, providing flexibility for future investments and acquisitions [9][21]. - A DuPont analysis reveals a return on equity (ROE) of 14.77%, with an asset turnover of 0.50 times, indicating efficient asset utilization [9][21]. Future Projections - Revenue is projected to grow from $8.09 billion in 2024 to $10.83 billion by 2026, reflecting a cumulative increase of 3.87% and an annualized growth rate of approximately 15.08% [16][21]. - Earnings per share (EPS) is expected to rise from $5.71 in 2024 to $8.94 by 2026, marking a substantial 56.55% increase [16][21]. Valuation Concerns - The stock is currently trading around $494, which is above its GF Value of $439.30, indicating potential overvaluation [18][22]. - The price-earnings ratio stands at 84.88, significantly higher than its peers, suggesting high investor expectations with little margin for error [20][22].

Company Performance - Intuitive Surgical, Inc. (ISRG) closed at $490.01, with a daily increase of +1.64%, underperforming the S&P 500's gain of 1.7% [1] - Over the past month, ISRG shares have depreciated by 1.09%, while the Medical sector gained 1.53% and the S&P 500 gained 1.27% [1] - The upcoming earnings report is scheduled for October 17, 2024, with an expected EPS of $1.65, indicating a growth of 13.01% year-over-year, and projected revenue of $2.02 billion, reflecting a 15.57% increase [1] Full Year Estimates - Zacks Consensus Estimates predict earnings of $6.67 per share and revenue of $8.1 billion for the full year, representing changes of +16.81% and +13.69% from the previous year [2] - Recent changes to analyst estimates indicate short-term business trends, with positive revisions reflecting optimism about the company's profitability [2] Valuation Metrics - Intuitive Surgical, Inc. currently has a Zacks Rank of 3 (Hold), with no change in the consensus EPS estimate over the past month [3] - The company is trading at a Forward P/E ratio of 72.33, significantly higher than the industry average of 27.21 [3] - The PEG ratio for ISRG is 4.16, compared to the Medical - Instruments industry's average PEG ratio of 2.19 [3] Industry Overview - The Medical - Instruments industry is part of the Medical sector and holds a Zacks Industry Rank of 65, placing it in the top 26% of over 250 industries [4] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [4]

Core Viewpoint - Intuitive Surgical (ISRG) has experienced significant stock growth, driven by strong demand for its robotic surgery procedures, particularly the newly launched da Vinci 5 system, which is expected to continue attracting investors throughout 2024 [1][3]. Group 1: Stock Performance and Market Trends - ISRG shares have risen 14.2% in the past three months, outperforming the Zacks Medical - Instruments industry's growth of 3.8% and the broader Zacks Medical sector's return of 5.4% [1]. - Year-to-date, ISRG stock has increased by 45.7%, primarily due to strong demand for robotic surgery procedures [1]. - The company expects procedure volume to grow by 14-17% in 2024, indicating a continued upward trend in revenue [3]. Group 2: Product Developments and Market Penetration - The da Vinci 5 system, launched in March, is showing strong uptake and is expected to drive market penetration with its advanced imaging capabilities [1][6]. - The installed base of the da Vinci system grew approximately 14% year-over-year during the second quarter of 2024 [6]. - The Ion endoluminal system, launched in 2019, has also seen significant growth, with its installed base increasing by approximately 56% year-over-year to 678 units [7]. Group 3: Financial Outlook - The Zacks Consensus Estimate for 2024 revenues reflects a year-over-year improvement of 13.7% [3]. - ISRG expects gross margin in 2024 to be between 68.5% and 69%, higher than 68% in 2023, driven by strong uptake of da Vinci 5 and improved supply challenges [5]. - The Zacks Consensus Estimate for 2024 earnings is currently pegged at $6.67 per share, indicating a 16.8% year-over-year improvement [5]. Group 4: Competitive Landscape and Challenges - ISRG faces competition from established companies like Johnson & Johnson and Medtronic, which may impact its market position [8]. - The company has maintained its guidance for full-year 2024 despite potential headwinds from soft demand for bariatric procedures and challenges in Asia [4][8]. - Ongoing supply-chain constraints and geopolitical tensions may affect the availability of devices, impacting growth [9].

Industry Overview - The Medical Instruments industry is undergoing a transformative phase driven by the adoption of generative Artificial Intelligence (genAI) and digital therapeutics, with significant growth expected in the healthcare sector [1][4] - The industry is highly fragmented, involving extensive research and development across various therapeutic areas, and has seen a resurgence in innovation following the pandemic [3] Trends Impacting the Industry - **Digital Revolution**: The adoption of genAI is increasing, focusing on "hyper personalization" in treatment options and operational management, with the global digital health market projected to grow from $262.63 billion in 2022 to approximately $939.54 billion by 2032, at a CAGR of 13.1% [4] - **M&A Activity**: The industry is benefiting from a trend of mergers and acquisitions, with 122 deals worth $21.1 billion announced in Q2 2024, marking a 275% increase in value compared to the previous year [5] - **Economic Growth Projections**: The IMF projects economic growth of 3.2% in 2024, with concerns about geopolitical shocks and commodity price spikes affecting the industry [6][7] Performance Metrics - The Zacks Medical Instruments industry holds a Zacks Industry Rank of 63, placing it in the top 25% of over 250 Zacks industries, indicating positive near-term prospects [8] - Over the past year, the industry has risen by 15.5%, outperforming the broader sector's 10% increase but underperforming the S&P 500's 22.6% surge [9] Valuation Insights - The industry is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 33.52X, higher than the broader industry's 23.48X and the S&P 500's 21.19X [10] Company Highlights - **Intuitive Surgical**: Expected to achieve 2024 sales of $8.1 billion, a 13.7% increase from 2023, with an EPS estimate of $6.67, reflecting a 16.8% improvement [12] - **Masimo**: Projected 2024 sales of $2.1 billion, a 2.4% rise, with an EPS estimate of $3.87, indicating a 2.1% increase [13] - **Veracyte**: Anticipated 2024 sales of $437 million, a 21% increase, with an EPS estimate of 14 cents per share, representing a 113.7% jump [15]

Company Performance - Intuitive Surgical, Inc. (ISRG) ended the latest trading session at $490.93, reflecting a +1.38% increase from the previous close, outperforming the S&P 500's daily gain of 1.07% [1] - Over the last month, ISRG shares increased by 3.2%, slightly lagging behind the Medical sector's gain of 3.34% and surpassing the S&P 500's gain of 2.92% [1] - Analysts expect ISRG to report earnings of $1.65 per share, indicating a year-over-year growth of 13.01%, with a revenue forecast of $2.02 billion, representing a 15.57% increase from the same quarter last year [1] Annual Forecast - The Zacks Consensus Estimates project earnings of $6.67 per share and revenue of $8.1 billion for the year, reflecting changes of +16.81% and +13.69% respectively compared to the previous year [2] - Recent revisions to analyst forecasts are crucial as they reflect near-term business trends, with positive estimate revisions indicating a favorable business outlook [2] Valuation Metrics - ISRG currently has a Zacks Rank of 1 (Strong Buy), with an impressive track record of outperformance, as 1 stocks have generated an average annual return of +25% since 1988 [3] - The company has a Forward P/E ratio of 72.65, which is a premium compared to its industry's Forward P/E of 27.79 [3] - ISRG's PEG ratio stands at 4.18, significantly higher than the average PEG ratio of 2.29 for the Medical - Instruments industry [3] Industry Overview - The Medical - Instruments industry, part of the Medical sector, holds a Zacks Industry Rank of 63, placing it in the top 25% of over 250 industries [4] - The Zacks Industry Rank assesses the strength of industry groups based on the average Zacks Rank of individual stocks, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [4]