Intuitive Surgical Stock Drops Despite Earnings Beat; Wall Street Remains Optimistic

Intuitive Surgical (ISRG) shares took a tumble Thursday, despite reporting fourth-quarter earnings that topped analysts' expectations. The stock wavered between slight gains and losses in extended trading, closing at an all-time high a day earlier and gaining about 62% over the past year through Thursday's close. The company reported fourth-quarter revenue of $2.41 billion, a 25% jump year-over-year and above the analyst consensus compiled by Visible Alpha. Earnings came in at $686 million, or $1.88 per share, up from $606 million, or $1.69 per share, a year ago and also beat expectations.

The medical device maker reported fourth-quarter adjusted earnings of $2.21 per share, beating analyst estimates of $1.79. Intuitive Surgical said the number of procedures performed with its da Vinci minimally invasive surgical devices increased 18% from a year earlier. The company said it installed 493 da Vinci systems in the period, compared to 415 a year ago. Intuitive Surgical expects da Vinci procedures this year to grow 13% to 16% from 2024. Its adjusted gross profit margin is expected to fall between 1 to 2 percentage points, but that doesn’t account for potential new tariffs, which could have a “material” impact, the company said.



Despite the strong results, Intuitive Surgical shares fell 0.3% to close at $608.66 on Thursday. The stock's high valuation, with a price-to-earnings ratio of around 80, may be challenging its growth in the short term. However, the company's strong fundamentals and industry leadership suggest that it remains a promising long-term investment.

Wall Street analysts remain optimistic about Intuitive Surgical's prospects. JP Morgan analyst Robbie Marcus maintained Intuitive Surgical with an Overweight rating and raised the price target from $575 to $675. Citigroup analyst Joanne Wuensch maintained the stock with a Buy rating and boosted the price target from $640 to $711.

In conclusion, while Intuitive Surgical's stock price dropped despite beating earnings expectations, the company's strong fundamentals and industry leadership continue to make it an attractive long-term investment. Wall Street analysts remain optimistic about the company's prospects, and its high valuation may be a temporary challenge to its growth. Investors should monitor the company's performance closely and consider the long-term potential of Intuitive Surgical's business.