Group 1 - Narweena is an asset manager that focuses on identifying market dislocations due to poor understanding of long-term business prospects [1] - The firm aims to achieve excess risk-adjusted returns by targeting businesses with secular growth opportunities in markets with barriers to entry [1] - Narweena's investment strategy emphasizes company and industry fundamentals to uncover unique insights, with a high risk appetite and long-term investment horizon [1] Group 2 - The firm favors smaller cap stocks and markets where competitive advantages are not immediately apparent [1] - Narweena believes that an aging population, low population growth, and stagnating productivity will create new investment opportunities distinct from historical trends [1] - Many industries may experience stagnation or secular decline, which could paradoxically enhance business performance by reducing competition [1] Group 3 - Some businesses may face rising costs and diseconomies of scale, while economies are increasingly dominated by asset-light businesses [1] - The declining need for infrastructure investments is leading to a situation where a large pool of capital is pursuing a limited set of investment opportunities, driving up asset prices and compressing risk premia [1] - Richard Durant, the leader of Narweena, has a strong educational background in engineering and finance, along with an MBA, and has passed the CFA exams [1]

Core Viewpoint - Analysts forecast that Intuitive Surgical, Inc. (ISRG) will report quarterly earnings of $1.76 per share, reflecting a year-over-year increase of 10%, with anticipated revenues of $2.41 billion, showing a 25.2% increase compared to the previous year [1]. Earnings Estimates - The consensus EPS estimate for the quarter has been revised upward by 0.6% over the past 30 days, indicating a collective reassessment by analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue Projections - Analysts predict 'Revenue- Product (Instruments and accessories and Systems)' will reach $1.82 billion, indicating a year-over-year change of +12.4% [5]. - 'Revenue- Services' is expected to be $343.90 million, reflecting a +13% change year over year [5]. - 'Revenue- Systems' is projected to be $484.93 million, showing a +1% change from the previous year [5]. - 'Revenue- Instruments and accessories' is estimated at $1.34 billion, suggesting a +17.2% year-over-year change [6]. System Units and Installed Base - Total System Units Placed - Total Company is expected to reach 427, up from 415 in the previous year [6]. - The 'Da Vinci Surgical System Installed Base' is forecasted to be 9,931, compared to 8,606 in the same quarter last year [7]. - Total System Units Placed - Outside of the United States is projected at 207, slightly up from 206 in the previous year [7]. - Total System Units Placed - United States is expected to be 208, down from 209 in the same quarter last year [8]. Profit and Cost Estimates - Estimated 'Gross profit- Service' is $229.90 million, compared to $214.80 million in the same quarter last year [8]. - 'Cost of revenue- Service' is expected to reach $106.97 million, up from $89.60 million in the previous year [9]. Stock Performance - Shares of Intuitive Surgical have returned +11.5% over the past month, contrasting with the Zacks S&P 500 composite's -2.1% change [9].

Core Insights - Intuitive Surgical (ISRG) shares reached a record high following the announcement of preliminary fourth-quarter and full-year revenue exceeding expectations, driven by increased demand for surgical robotics equipment [2][10] Financial Performance - The company placed 493 da Vinci surgical systems in Q4, an increase from 415 in the previous year, with procedures using the equipment growing 17% year-over-year, particularly in cancer operations [3][10] - Intuitive Surgical shares rose 0.7% to close above $584, having surged nearly 8% the previous day, and have increased 60% over the past 12 months, significantly outperforming the S&P 500's 25% return during the same period [4][10] Technical Analysis - The stock has been trading within an extended rising wedge pattern since early February last year, with recent price consolidation near the lower trendline and 50-day moving average before a significant upward movement [5][10] - An upside target of $650 has been projected using the measuring principle, which involves adding $70 to the top trendline of the rising wedge [7][10] - Key support levels to monitor during potential pullbacks include $550 and $520, with the $550 level expected to attract buying interest [8][9][10]

Core Viewpoint - Intuitive Surgical (ISRG) reported strong preliminary revenues for Q4 and full-year 2024, leading to a 7.7% increase in share price on January 15, 2025 [1] Q4 Preliminary Results - Worldwide revenues for Q4 2024 reached approximately $2.41 billion, reflecting a 25% year-over-year increase and surpassing Zacks Consensus Estimates of $2.21 billion [1] - Instruments and accessories revenues are expected to be around $1.41 billion, up 23% from the previous year [2] - Preliminary systems revenues are projected to be about $655 million, marking a 36% year-over-year growth [3] - The company placed 493 da Vinci Surgical systems in Q4 2024, an increase from 415 systems in the same period last year [4] Full-Year Preliminary Results - Full-year worldwide revenues are anticipated to be $8.35 billion, indicating a 17% year-over-year increase, exceeding the Zacks Consensus Estimate of $8.15 billion [5] - Instruments and accessories revenues for the full year are expected to be $5.08 billion, representing a 19% growth year-over-year [5] - Systems revenues improved by 17% to $1.97 billion compared to 2023 [5] Procedure Volume and Future Outlook - Procedure volumes have shown consistent growth, primarily driven by general surgery and cancer procedures, with an expected growth of approximately 13-16% in worldwide da Vinci procedures for 2025 [6] Price Performance - Intuitive Surgical's shares have increased by 22.5% over the past three months, outperforming the industry growth of 0.1% and the S&P 500's increase of 0.9% [8]

Group 1 - Intuitive Surgical reported preliminary Q4 sales of $2.4 billion, reflecting a 25% year-over-year growth, significantly exceeding the consensus estimate of $2.2 billion and 14% growth [1] - The total procedure volume increased by 18% in Q4, driven by the new da Vinci 5 system, with 174 out of 493 systems placed in Q4 being the new model [1] - The company anticipates total procedure volume growth between 13% and 16% in 2025 [1] Group 2 - Intuitive Surgical's stock (ISRG) has risen 72% since the beginning of 2024, outperforming peers and the broader market [2] - Over the last four years, ISRG stock has shown volatility with annual returns of 32% in 2021, -26% in 2022, 27% in 2023, and 55% in 2024 [2] - The Trefis High Quality Portfolio has outperformed the S&P 500 with better returns and less risk compared to ISRG [2] Group 3 - Current ISRG stock trades at $580, with a price-to-sales (P/S) ratio of 25x trailing revenues, higher than its five-year average of 20x [3] - A slight rise in valuation multiple is considered justified due to strong growth in procedure volume and sales [3] - A bullish outlook for Intuitive Surgical projects substantial growth in its share of overall surgical procedures [3]

Company Overview - Intuitive Surgical Inc is a solutions provider in healthcare, focusing on improving diagnostic and treatment timelines for critical conditions [2] - The company is represented by CEO Gary Guthart and CFO Jamie Samath at the 43rd Annual J P Morgan Healthcare Conference [1] Industry Challenges - Lung cancer diagnosis in the US faces significant delays, with tumors being detected approximately one year later than possible with proactive screening [2] - Women with endometriosis typically endure symptoms for over five years before definitive diagnosis and even longer before receiving proper treatment [4] Company Motivation - Intuitive Surgical is driven by addressing critical healthcare gaps, as exemplified by the delayed diagnosis and treatment timelines in lung cancer and endometriosis [2][4] - The company emphasizes these examples as part of their broader motivation to improve healthcare outcomes, though they are not meant to represent specific strategic directions [5]

Key Points Company and Industry 1. **Company**: Intuitive Surgical, Inc. (NASDAQ: ISRG) 2. **Industry**: Medical technology (med-tech) 3. **Event**: 43rd Annual J.P. Morgan Healthcare Conference Call 4. **Date**: January 15, 2025 5. **Time**: 12:00 PM ET Core Views and Arguments 1. **Motivation**: Intuitive Surgical views itself as a solutions provider in healthcare. 2. **Statistics**: Lung cancer is the largest cancer killer in the United States, with a delay of about a year in definitive detection and assessment compared to early detection. 3. **Statistics**: Women typically suffer from endometriosis symptoms for more than five years before it is definitively defined and even longer before treatment. Additional Important Content 1. **Forward-looking statements**: Intuitive Surgical encourages participants to refer to their SEC filings on the Investor page of their website for forward-looking comments. 2. **Gary Guthart's role**: CEO of Intuitive Surgical 3. **Jamie Samath's role**: Executive Vice President & Chief Financial Officer of Intuitive Surgical

Core Insights - Intuitive Surgical's preliminary fourth-quarter earnings significantly exceeded analysts' expectations, leading to a 6% increase in share price [1] - The company reported a surprising 25% revenue growth for Q4, surpassing the expected 14% growth [2] - This 25% growth is the fastest since 2021 and well above the company's average annualized growth rate of 15% over the last decade [3] Revenue Growth - The launch of the da Vinci 5 system in 2024 contributed to a 36% increase in systems revenue, which includes surgical robots installed [3] - The growth in systems revenue is expected to lead to higher recurring revenue in the future due to the company's razor-and-blade business model [4] Recurring Revenue Model - Approximately 83% of Intuitive Surgical's total sales come from recurring revenue, supported by an installed base of around 10,000 da Vinci systems [5] - The company's dominant market share in the robot-assisted surgery industry provides a significant competitive advantage, justifying its high valuation [5]

Core Viewpoint - Intuitive announced preliminary financial results for Q4 and full year 2024, showing significant revenue growth driven by increased procedure volumes and customer adoption of its robotic-assisted surgical systems [1][3][11]. Financial Performance - Q4 2024 revenue is expected to be approximately $2.41 billion, a 25% increase from $1.93 billion in Q4 2023 [3][8]. - Full year 2024 revenue is projected at approximately $8.35 billion, reflecting a 17% increase compared to $7.12 billion in 2023 [3][8]. - Instruments and accessories revenue for Q4 2024 is expected to be around $1.41 billion, up 23% from $1.14 billion in Q4 2023 [4][8]. - Full year 2024 instruments and accessories revenue is anticipated to be approximately $5.08 billion, a 19% increase from $4.28 billion in 2023 [4][8]. - Systems revenue for Q4 2024 is expected to be approximately $655 million, a 36% increase from $480 million in Q4 2023 [6][8]. - Full year 2024 systems revenue is projected at approximately $1.97 billion, a 17% increase from $1.68 billion in 2023 [6][8]. Operational Highlights - Q4 2024 da Vinci procedures increased by approximately 18% compared to Q4 2023, with about 2,683,000 procedures performed in 2024, a 17% increase from 2,286,000 in 2023 [5][8]. - The growth in procedure volume was driven by a 19% increase in U.S. general surgery procedures and a 23% increase in procedures outside the U.S., primarily in cancer surgeries [5][8]. - The company placed 493 da Vinci surgical systems in Q4 2024, up 19% from 415 systems in Q4 2023 [7][8]. - For the full year 2024, the company placed 1,526 da Vinci surgical systems, an 11% increase from 1,370 systems in 2023 [9][8]. Future Outlook - The company expects worldwide da Vinci procedures to increase by approximately 13% to 16% in 2025 compared to 2024 [5][8]. - The company did not experience noticeable disruptions in procedure volumes due to COVID-19 in 2024, indicating a recovery from previous impacts [10][8].

Core Viewpoint - Intuitive Surgical (ISRG) is positioned as a strong investment opportunity due to its innovative surgical robotics, particularly the da Vinci system, which is expected to see significant demand growth regardless of political changes in 2025 [2][6]. Company Overview - Intuitive Surgical specializes in advanced surgical devices, with the da Vinci system being the most widely used surgical robot globally [2]. - The company anticipates a year-over-year demand growth of 12% to 16% for the da Vinci system, attributed to its less invasive and more precise technology, leading to faster patient recovery times [2]. Investment Performance - During the previous Trump administration, ISRG shareholders experienced a stock return of 179%, raising expectations for similar performance in the future [3]. - The stock does not pay dividends, which may deter some investors, but alternative strategies such as selling covered calls are suggested to generate income [3][4]. Fund Investment Strategy - A proposed investment strategy involves purchasing the BlackRock Health Sciences Trust (BMEZ), which has ISRG as its top holding at 4.6% of the portfolio, providing a way to gain exposure to ISRG while receiving a monthly dividend yield of 14.3% [5][9]. - BMEZ is currently trading at a 9% discount to its asset value, presenting a buying opportunity for investors [6]. Market Context - The healthcare sector has seen a selloff following political developments, particularly with the nomination of Robert F. Kennedy Jr. to the Department of Health and Human Services, which has negatively impacted healthcare stocks despite Intuitive's strong fundamentals [6][7]. - The broader healthcare sector is considered undervalued, with BMEZ being highlighted as a particularly attractive investment at just 91 cents on the dollar [9]. Historical Performance - BMEZ's top holdings have historically performed well under the previous Trump administration, with returns ranging from 126% to over 1,000% [8]. - The fund employs a strategy of selling covered calls on its holdings to generate additional income, which supports its high dividend payout [8].