Intuitive Surgical (ISRG 0.55%) is a big name in robotic-assisted surgery. The company's da Vinci surgical systems can make surgery more efficient and help surgeons perform complex operations. But that's an industry that's still in its early growth stages, and that isn't helping the stock right now, especially given its elevated valuation.

Shares of Intuitive have fallen nearly 32% this year, while the S&P 500 has declined by just 18%. But investors shouldn't be discouraged by the stock's recent slide, as the business remains in solid shape and improving conditions in the healthcare industry should improve its prospects.

Here's a closer look at why the stock could make for an underrated buy right now.

Procedure growth is accelerating

On Oct. 18, Intuitive Surgical reported its latest earnings numbers for the period ending Sept. 30. A key metric that investors always look to as a sign of the popularity of its da Vinci devices is the growth in worldwide procedures. In Q3, they grew at a rate of 20% year-over-year, which is higher than the compounded annual growth of 16% that the company has averaged over the past three years. And just three months earlier the procedure growth rate was only 14%.

Not only does a strong growth rate help demonstrate that the devices are being used more often, but it's a helpful gauge of how well hospitals are returning to normal operations after facing disruptions due to COVID-19. The company generates the bulk of its revenue from instruments and accessories, which bring in between $600 and $3,500 per surgical procedure. In Q3, instruments and accessories accounted for $871.6 million in revenue, or 56% of the top line. Due to the strong procedure growth, the company's total sales of $1.6 billion during the quarter rose 11% from the prior-year period.

Operating income growth should improve next year

Intuitive Surgical's business is profitable, but last quarter the company's operating income totaled $398.9 million and declined by 10% as a result of rising overhead. But on the company's earnings call, CEO Gary Guthart said that the company "moderated headcount growth" and expects "the rate of growth in fixed expenses to slow as we pursue leverage in our enabling functions and sequence some of our forward investments." In Q3, the company added 530 employees versus the 700 it has averaged over the previous three periods.

If Intuitive can ensure expenses rise at a slower rate than revenue, then the business should be in good shape to improve on its bottom line, which, in turn, will help its valuation and make it a more attractive investment.

The stock is a better buy than it was last year

Intuitive's stock isn't cheap, trading at 65 times its trailing profits. But when compared to where it has traded in the past five years, it's right in line with its average:

ISRG PE Ratio Chart
Data by YCharts.

For a fast-growing stock like Intuitive, investors will often need to pay a premium to own a piece of the business. If Intuitive continues growing and is able to bring down its expenses, then earnings should improve, and that will bring down its lofty price-to-earnings multiple.

Is Intuitive a buy right now?

If you're willing to buy and hold, Intuitive could make for an optimal stock to buy. There is a danger in the short term that its shares could go lower given the current bear market. But amid a return to normal in the healthcare industry and the company focusing on keeping costs down, Intuitive's future earnings reports could look even better than the one it just reported. And a growing business at a cheaper valuation could make Intuitive a coveted stock among growth investors.