Intuitive Surgical (NASDAQ: ISRG) is scheduled to report earnings after the market closes on July 16. The robotic healthcare inventory has suffered to this point this yr, falling just a little greater than 30%, regardless of a robust first-quarter earnings report.
Positioning a commerce or an funding proper earlier than an earnings report all the time carries a little bit of occasion danger, however the present setup for Intuitive Surgical presents a compelling bull case.
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It is value noting that the inventory has a current historical past of earnings beats, bettering analysts’ predictions in every of the previous 4 quarters. If Intuitive reviews higher earnings than the present predictions of $2.81 billion in income and $2.48 in earnings per share (EPS), the inventory will possible go up. Nonetheless, it is necessary to take an extended view of the corporate’s potential for those who’re planning on investing.
Listed here are three the reason why Intuitive Surgical’s inventory is an effective long-term purchase:
Picture supply: Getty Pictures.
The worth is true, for now
Whereas Intuitive traditionally instructions a premium a number of as a result of its absolute dominance in robotic surgical procedure, the inventory’s sell-off this yr has pushed its ahead price-to-earnings (P/E) a number of all the way down to round 36x. That is a stark low cost to its 5-year historic common of greater than 58 instances ahead P/E. This compression affords a way more engaging entry level into an organization the place greater than 80% of income is extremely sturdy and recurring, from devices, equipment, and providers.
Within the first quarter, recurring income from devices and providers grew 23% yr over yr to $2.12 billion. The rise in devices and equipment income was primarily pushed by roughly 16% development in da Vinci process quantity, buyer shopping for patterns, and roughly 39% development in Ion process quantity.
As soon as a hospital installs a machine, it’s successfully locked into the Intuitive ecosystem, creating a strong, dependable income stream for traders.
It is value noting that within the first quarter, income and EPS each grew by double-digit percentages, with income reported as $2.77 billion, up 23% yr over yr, and EPS of $2.28, up practically 19% over the identical interval a yr in the past.
One purpose for pessimism amongst traders is that GLP-1 weight problems medicine are decreasing bariatric surgical volumes. Nonetheless, Intuitive is making up for that with the expansion in different medical procedures carried out utilizing its techniques. The opposite concern is that the corporate is now selling an extended lifespan for its devices to decrease hospital prices, however whereas which will reduce down on income from devices and equipment, it additionally builds buyer loyalty and improves the corporate’s moat.
Its da Vinci 5 system is seeing a pleasant uptake
The central near-term driver for Intuitive is the rollout of its next-generation da Vinci 5 system. Early knowledge present that hospital utilization of the da Vinci 5 is roughly 11% greater than the legacy Xi platform. As a result of buyer adoption has moved quicker than anticipated, the accelerating trade-in and improve cycle serves as a serious elementary catalyst that might drive an upside shock in system placements and ahead steering.
The primary quarter 2026 da Vinci surgical system placements included 232 da Vinci 5 techniques, in contrast with 147 within the first quarter of 2025.
The launch of the da Vinci 5 platform introduces true hardware-enabled synthetic intelligence and Pressure Suggestions expertise, which give surgeons with a bodily sense of resistance and tissue strain for the primary time. Past only a near-term improve cycle, this establishes the expertise baseline for the following decade of surgical procedure. It additionally creates an enormous technical barrier that newer rivals will discover troublesome to duplicate.
Growth into diagnostics and comfortable tissue remedy
For years, the corporate centered strictly on treating illness by means of basic surgical procedure with the da Vinci platform. With its Ion platform, it’s shifting upstream to personal the prognosis and early intervention stage as effectively.
The spearhead of this diagnostic enlargement is the Ion endoluminal system, a robotic bronchoscopy platform designed for minimally invasive lung biopsies. Ion makes use of an ultrathin, extremely versatile robotic catheter.
Ion feeds Intuitive’s high-margin recurring income mannequin. Every process requires single-use versatile needles, imaginative and prescient probes, and patient-specific 3D planning software program. Moreover, Intuitive is presently integrating adjunctive diagnostic applied sciences reminiscent of endobronchial ultrasound (EBUS) immediately into the Ion workflow to extend income per process.
Intuitive can also be deepening its moat in comfortable tissue remedy by means of its da Vinci SP (Single Port) platform. Whereas the da Vinci 5 requires a number of small incisions throughout the stomach, the SP platform permits a complete surgical staff of digicam and devices to enter by means of one single 2.5-centimeter incision or a pure orifice. The SP platform is quickly gaining traction in urology and transoral otolaryngology (head and neck surgical procedures), driving high-volume process development.
So Intuitive Surgical appears undervalued heading into the Q2 report. For these with a multi-year horizon, the setup appears favorable.
Must you purchase inventory in Intuitive Surgical proper now?
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James Halley has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Intuitive Surgical. The Motley Idiot recommends the next choices: lengthy January 2028 $520 calls on Intuitive Surgical and quick January 2028 $530 calls on Intuitive Surgical. The Motley Idiot has a disclosure coverage.
