Why Is Intuitive Surgical (ISRG) Up 7.1% Since Last Earnings Report?

Core Viewpoint - Intuitive Surgical, Inc. has shown strong performance in its recent earnings report, with significant year-over-year growth in earnings and revenue, leading to a positive outlook despite a slight decline in gross margin [3][4][8]. Financial Performance - The company reported Q3 2025 adjusted earnings per share of $2.40, exceeding the Zacks Consensus Estimate of $1.99 by 20.6%, and reflecting a 30.4% year-over-year improvement [3]. - Revenues reached $2.51 billion, marking a 23% increase year-over-year, and surpassing the Zacks Consensus Estimate by 3.9% [4]. - Adjusted gross profit was $1.70 billion, up 21% year-over-year, with a gross margin of 68%, down approximately 110 basis points from the previous year [8]. Segment Performance - Instruments & Accessories segment revenues totaled $1.52 billion, a 20.1% year-over-year increase, driven by a 19% growth in da Vinci procedure volume [5]. - Systems segment revenues reached $590.4 million, up 32.7% year-over-year, attributed to higher system placements and an increase in average selling price [6]. - Services segment revenues amounted to $395.9 million, reflecting a 20.4% increase from the prior year [7]. Cost and Margin Analysis - Selling, general and administrative expenses rose to $573.3 million, a 12.3% increase year-over-year, while research and development expenses increased by 15.2% to $329.4 million [8]. - Adjusted operating income was $975.9 million, up 29.2% year-over-year, with an operating margin of 38.9%, an increase of approximately 190 basis points from the previous year [9]. Financial Position - At the end of Q3, the company had cash, cash equivalents, and investments totaling $8.43 billion, down from $9.53 billion in the previous quarter [11]. Market Sentiment and Outlook - There has been an upward trend in earnings estimates, with a consensus estimate shift of 5.03% in the past month [12]. - Intuitive Surgical holds a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [14].