Unlocking Intrinsic Value: Analysis of Intuitive Surgical Inc

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$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]