Core Insights - Intuitive Surgical (ISRG) stock is considered a solid investment due to high margins and cash generation capabilities at a discounted price [2] - The stock has increased by 11% this year, while its Price-to-Sales (P/S) ratio is 11% lower compared to the previous year [3] Company Performance - In Q3 2025, global procedure volume rose by 20%, driven by strong adoption of da Vinci and Ion platforms, with 240 new placements of the da Vinci 5 system [4] - The installed base of da Vinci systems is nearing 10,800, leading to steady demand for high-margin instruments and accessories, which also grew by 20% [4] - Despite tariff pressures on gross margins, management's focus on operational optimization and cash generation has provided resilience, raising full-year procedure growth guidance to 17-17.5% [4] Financial Metrics - ISRG maintains a high Price-to-Earnings (P/E) ratio as investors anticipate long-term growth, operating under a razor–razorblade model that ensures recurring revenue from instrument sales [5] - Recent profitability metrics include an operating cash flow margin of 30.8% and an operating margin of 29.3% over the last twelve months [9] - Revenue growth for ISRG was 22.2% over the last twelve months and 16.3% on average over the last three years [9] Valuation - ISRG stock is currently available at a P/S multiple of 21.5, representing an 11% discount compared to one year ago [9] - The company is characterized by a market capitalization greater than $10 billion and high cash flow margins [10]

Core Viewpoint - Intuitive Surgical reported strong financial results for Q2 2025, with revenue of $2.44 billion, a 21.4% year-over-year increase, driven by the growth of surgical volumes and the accelerated adoption of the da Vinci 5 system, despite a subsequent decline in stock price due to concerns over cost structure and gross margin adjustments [1][3][4]. Revenue and Profit Performance - Total revenue for Q2 2025 reached $2.44 billion, up from $2.01 billion in Q2 2024, marking a 21.4% increase; GAAP net profit was $658 million (EPS of $1.81), a 25% increase year-over-year; non-GAAP adjusted net profit was $798 million, with an EPS of $2.19, exceeding analyst expectations by $0.26 [3][4]. Growth Drivers - The primary drivers of revenue improvement include the continuous growth in global surgical volumes and the increased installation of higher-end systems like the da Vinci 5 [4][5]. Da Vinci 5 System Performance - The da Vinci 5 system saw significant growth, with 395 new installations in Q2 2025, including 180 units of the da Vinci 5, compared to 70 units in the same period of 2024; the system has received regulatory approvals in the US, EU, and Japan for various minimally invasive procedures [6][7]. Market Expansion and Strategy - Intuitive Surgical is pursuing a strategy of direct market expansion, transitioning from distributors to direct operations, having integrated agents in Spain, Portugal, and Brazil in Q2 2025, enhancing brand control and training resource efficiency [11]. Surgical Volume Growth - Global surgical volumes using the da Vinci system grew by 17% year-over-year in Q2 2025, with an expected annual growth rate of 15.5%-17% for 2025, driven by the normalization of inpatient surgical demand in markets like the US, South Korea, India, and the UK [8][11]. Structural Advantages and Platform Ecosystem - Intuitive Surgical has established a robust growth moat through a platform ecosystem that integrates systems, consumables, and data, enhancing digital capabilities and deepening relationships with hospitals and physicians; the company continues to innovate with new indications and regional acquisitions [13][15].