What risks could derail ISRG's earnings momentum in 2025?

Intuitive Surgical (ISRG) faces several risks that could potentially derail its earnings momentum in 2025: 1. **Geopolitical Tensions and Tariffs**: The company has warned about the potential impact of new tariffs on its business, which could affect profitability. The introduction of tariffs could increase the cost of its products and services, thereby reducing gross profit margins. 2. **Increased Competition**: Heightened competition and regulatory approvals could influence selling cycles and market dynamics, impacting ISRG's market position and profitability. The company's ability to maintain its market share in the face of competition is a key risk. 3. **Product Mix and Depreciation**: The company's product mix and increased depreciation could impact gross margins. The introduction of new products and systems, such as the da Vinci 5, has been successful, but the initial investment in research and development can strain financials and affect short-term profitability. 4. **Bariatric Procedure Decline**: There has been a decline in bariatric procedures, which could continue to affect ISRG's earnings. The rise of GLP-1 medications is contributing to this decline, which may put pressure on the company's revenue stream. 5. **Margin Pressures**: ISRG has indicated that it expects its non-GAAP gross profit margin to be between 67% and 68% in 2025, down from 69.1% in 2024. This forecast excludes potential impacts from new tariffs, which could be significant. Margin pressures could erode the company's earnings if not managed effectively. 6. **Currency Fluctuations**: The company operates globally, and currency fluctuations could impact its financial results. Changes in exchange rates could affect the value of its international revenue when converted back into the US dollar. 7. **System Utilization and Growth Rates**: While ISRG has seen strong procedure growth, there is a risk that system utilization may not increase at the same rate. System utilization is a critical metric linked to patient demand and hospital health, and a slowdown in this area could affect revenue growth. These risks, if not managed properly, could impact ISRG's earnings momentum in 2025. The company's ability to navigate these challenges will be crucial in maintaining its financial performance and market position.