Intuitive Surgical (ISRG -1.65%) climbed more than 1,000% over a decade. That's as more and more hospitals installed its robotic surgical systems and regularly bought related tools and services. The stock soared past the $1,000 mark last year. And the company went on to launch a stock split in October.
Since the stock split, Intuitive shares have lost about 8%. But I'm not worried. There are two clear signs that Intuitive has bright days ahead. And that should lead to solid share performance over the long term. Let's take a look at the two charts that make me optimistic.
Image source: Getty Images.
More than 6,700 surgical systems
First, a bit of background on Intuitive. It makes the Da Vinci robotic surgical system that's used for a variety of minimally invasive procedures -- in areas from general surgery to specialties like gynecology. Today, more than 6,700 Da Vinci systems are installed at hospitals worldwide. Intuitive generates revenue through the sales of these million-dollar systems. But it makes even more money by selling the instruments and accessories needed for Da Vinci procedures.
Let's look at our first chart. It shows that the global market for surgical robots is growing. It climbed from $4.5 billion in 2016 to $5.1 billion a year later. The market is expected to reach $12.6 billion by 2025.
Image source: Statista.
All of that is good news for Intuitive. But here's the best news of all. Intuitive holds 71% of the market, according to a report by Reanin Research and Consulting. And its closest rival holds only 15% of the market. That's Stryker. I don't expect competitors to easily gain ground. Once hospitals have invested in a costly Da Vinci system -- and surgeons are trained on the system -- they probably won't switch over to a competitor. All of this means Intuitive is likely to benefit from the growing robotic surgery market.
A rebound in earnings
The second chart shows us a drop in Intuitive's revenue and profit, and then a sharp rebound.
ISRG Net Income (Annual) data by YCharts
Here's what's happening. Intuitive's earnings suffered during certain parts of the pandemic for two reasons. First, hospitals were busy handling coronavirus patients -- so they were less likely to order surgical systems. Second, since hospitals were so busy with COVID-19 patients, they postponed many non-essential surgeries. And that meant they didn't purchase certain Da Vinci instruments and accessories.
All of that resulted in lower earnings for Intuitive. The chart shows the situation is improving. And once the pandemic shifts to endemic, we're likely to see a clear rebound in activity -- and Intuitive's earnings.
So, Intuitive's days as a stock market star aren't over. The strength of the robotic surgery market and Intuitive's return to earnings growth may push the stock significantly higher once again.
