What happened

Shares of Intuitive Surgical (ISRG -0.55%) were jumping 6.6% higher as of 11:17 a.m. ET on Tuesday. The gain came after the robotic surgical-systems maker announced plans to repurchase $1 billion of its shares.

Intuitive Surgical stated in a filing to the U.S. Securities and Exchange Commission (SEC) that it has entered into an accelerated stock-buyback agreement with Citibank, a subsidiary of Citigroup. The company will initially receive around 3.6 million shares.

So what

Investors usually like stock buybacks because the transactions underscore a company's confidence in its prospects. They also can create buying pressure that lifts the share price.

Intuitive Surgical certainly could benefit from a lift. The healthcare stock had plunged as much as 49% year to date by mid-October. This decline stemmed in large part from investors' concerns about Intuitive's slowing growth.

However, the company's better-than-expected third-quarter results sparked a rebound for the stock. Intuitive Surgical CEO Gary Guthart stated in the Q3 call that supply chain issues aren't as problematic now as they've been in the past. CFO Jamie Samath also pointed out that procedure volume in China is recovering after COVID-19 lockdowns in the country earlier this year. 

Now what

With these signs of improvement in Intuitive Surgical's underlying business, it makes sense that the company wants to buy back shares. Even with the momentum over the past week, the stock is still well below its 52-week high.

It's still possible that COVID-19 could cause more problems for Intuitive, though. Management noted that procedures began to moderate in the late part of Q3 as COVID-19 cases rose. The stock could remain volatile over the near term, but its long-term prospects continue to look very good.