Why Intuitive Surgical Stock is Dominating the Medical Sector

Key Points

• Intuitive Surgical dominates the robot-assisted surgery segment with its da Vinci surgical system, originally launched in 2000.
• Intuitive Surgical has grown its install base of da Vinci robots to over 9,200, helping surgeons to be more precise and efficient with minimally invasive general surgery procedures ranging from colorectal tumor and gallstone removals to hernia repairs.
• Intuitive Surgical reported Q2 2024 top and bottom line beats as worldwide procedures rose 17% YoY.

Robotic surgery conjures up futuristic images of automated machines performing surgery on anesthetized human patients in an assembly line, but that's not the case at the moment. Robots have yet to replace human surgeons. However, they are able to augment human surgeons to be more precise and efficient with their surgeries. Intuitive Surgical Inc. NASDAQ: ISRG is the dominant leader in robot-assisted surgery with its da Vinci surgical systems.

Robotic-Assisted Surgery Continues to Become Mainstream

Da Vinci was the world’s first Federal Drug Administration (FDA) approved commercial robotic surgery system in 2000 for use in general laparoscopic surgery. Robotic-assisted surgery enables surgeons to operate with improved vision, precision, access, and clarity with virtually no physical limitations. It's a trend that is continuing to gain acceptance as more hospitals, providers, and health insurers view it as a necessity rather than a luxury. With an install base of over 9,200 worldwide and 60,000 surgeons trained in the da Vinci surgical system, Intuitive Surgical dominates the market.

Intuitive Surgical operates in the medical sector, competing with medical device makers like Zimmer Biomet Holdings NYSE: ZBH, PROCEPT BioRobotics Co. NASDAQ: PRCT, and Medtronic plc NYSE: MDT.

How Robotic-Assisted Surgery Systems Make Surgeons Better

Robotic-assisted surgical systems like the da Vinci help surgeons perform better by providing 4K 3D medical displays on 31-inch and 55-inch screens. They provide a greater range of motion and agility, not having to rely on a surgeon's ability to maintain stability and avoid shaking while maintaining precision control. They augment the physical abilities of the surgeon as the robotic arms have 360 degrees of motion. They provide better access to the area being operated on.

Patients with shorter recovery times experience the cumulative effect of the benefits: shorter hospital stays with less pain, risk of infection, scarring, and blood loss. Robotic surgery has a greater than 93% overall success rate. The da Vinci surgical system enables surgeons to perform complex surgeries through a small incision while performing more than 1,000 simultaneous safety checks per second.

How Intuitive Surgical Dominates the Robot-Assisted Surgery Market

The da Vinci surgical system has an install base that's grown to more than 9,200 over the past 20 years. Intuitive Surgical has an estimated 57% market share in the robotic surgery segment. Intuitive Surgical makes money by selling the systems, providing training and support, upgrading, and selling instruments and accessories. The da Vinci surgical system is often used for hernia repairs in addition to prostate and kidney removals, hysterectomies, cesarean sections, colorectal tumor removal, and stomach and pancreas surgery. The system has a 98% success rate in removing gallstones compared to the traditional laparoscopic method, with an average success rate under 70%.

Rates of Hernias Continue to Grow and Can Only Be Repaired with Surgery

Hernias are a common medical disorder that increases with age and can only be repaired through surgery. They don’t heal on their own. Hiatal hernias affect 20% of U.S. citizens and 50% over the age of 50. Over 25% of all men experience inguinal hernias, while congenital hernias occur in 15% of newborns. While not all hernias require surgery, there is a risk of strangulation, which is life-threatening. The use of robotic surgery for inguinal hernia repair has grown 41-fold from 0.7% to 28.8%.

ISRG Stock Forms a Bull Flag

The daily candlestick chart for ISRG illustrates a bull flag pattern. This pattern is comprised of a flagpole price surge preceding the parallel descending channel of lower highs and lower lows. The breakout of the upper descending trendline triggered the bull flag. The daily relative strength index (RSI) has flattened and stalled at the 55-band. Pullback support levels are at $439.00, $427.33, $413.82, and $403.76.

Intuitive Surgical Knocks It Out of the Ballpark Again

Intuitive Surgical reported Q2 2024 EPS of $1.78, beating consensus estimates by 24 cents. Revenues grew 14.5% YoY to $2.01 billion versus $1.97 billion consensus estimates. Worldwide procedures grew 17% YoY. The company placed 341 da Vinci surgical systems (including 70 da Vinci 5 systems), up from 331 in the year-ago period. The total system installed base grew to 9,203 systems, up 14% from 8,042 in Q2 2023. The company ended the quarter with $7.68 billion in cash and cash equivalents, up $360 million. Unlike the first quarter, Intuitive Surgical saw no noticeable impacts on procedure volume due to COVID-19 resurgences.

Intuitive Surgical CEO Gay Guthart commented, “Our business was healthy this quarter, and we are pleased by feedback on da Vinci 5 as well as the continued adoption of SP and Ion. We remain focused on delivering the goals we share with our customers, centered on improving patient outcomes.”

Intuitive Surgical analyst ratings and price targets are at MarketBeat. There are 20 analyst ratings on ISRG stock, comprised of 15 Buys and five Holds, with an average consensus price target of $442.30.