Intuitive Surgical Just Posted a Solid Quarter, but This Is Why the Stock Could Be in Trouble This Year

Core Viewpoint - Intuitive Surgical is experiencing solid growth and has significant long-term potential, but its stock has been declining due to concerns over potential tariffs impacting its business [1][2]. Financial Performance - In the fourth quarter of 2024, Intuitive Surgical reported sales of $2.4 billion, representing a 25% year-over-year increase [3]. - The number of da Vinci procedures increased by 18%, and the total number of da Vinci surgical systems installed rose by 15%, reaching 9,902 systems by year-end [3]. Tariff Impact - Management indicated that the threat of tariffs could have a "material impact" on the company's financials, particularly affecting margins and overall profitability [4]. - A significant portion of Intuitive's instruments is manufactured in Mexico, raising concerns about the proposed 25% tariffs by the U.S. government [4][5]. - The potential for retaliatory tariffs could also negatively affect demand for Intuitive's systems in international markets [5]. Market Sentiment - Investors are bracing for volatility due to the potential increase in costs from tariffs, which may be passed on to consumers already facing high inflation [6]. - The overall economic conditions and the negative effect on margins contribute to a cautious outlook for the healthcare company in the near term [7]. Long-term Investment Perspective - Despite the tariff threats, Intuitive Surgical is considered a good long-term investment opportunity, as policies can change with different administrations [9]. - The company has promising growth potential, but its current price-to-earnings multiple of around 90 suggests that future growth is already factored into its valuation, making it susceptible to further declines in the short term [10].