When it comes to robotic-assisted surgery, no one holds a candle to Intuitive Surgical (ISRG -0.37%), a technological leader and pioneer in the field. The company's da Vinci platform is the gold standard in robot-assisted laparoscopic surgery. Being at the top of its field has been lucrative for investors, as the stock has surged 51% over the past year.
One Wall Street analyst believes there's still plenty of upside ahead.
Numerous catalysts for Intuitive Surgical
Analysts at Citi raised their price target on Intuitive Surgical to $462 while maintaining a buy rating on the shares. That represents potential gains of 20% over the next year or so from the current price. The analysts said they expect "solid deliveries" in Q1 driven by Intuitive Surgical's latest platform and pent-up demand in the medical device space.
The analysts go even further, calling Intuitive Surgical a "top pick."
A significant upgrade
I think the analysts are onto something. When Intuitive Surgical reported its 2023 results, the company spent just short of $1 billion, or 14% of its total revenue, on research and development. The fruit of its investment is the da Vinci 5 -- the company's next-generation multiport robotic system -- which received approval for sale from the U.S. Food and Drug Administration (FDA) on March 14. The device is also being reviewed by regulators in Japan and Korea.
During the company's fourth-quarter earnings call, CEO Gary Guthart said the system has "four orders of magnitude greater processing power than our generation 4 products. That means 10,000 times the processing power to gather data, improve sensing, and deliver better digital and analytic performance."
Intuitive Surgical stock is by no means cheap, currently selling for 19 times trailing 12-month sales. However, over the past 10 years, revenue has grown by 247%, while net income surged 483%. Intuitive Surgical's strong financial performance has driven the stock up 742% in the past decade, which suggests the stock is deserving of its lofty premium.
