Shares of Intuitive Surgical (ISRG 0.94%) were pulling back today as a strong fourth-quarter earnings report didn't seem to be enough to justify the medical device maker's lofty valuation. Its guidance for 2025 was also slightly below estimates, which can often trigger a sell-off for growth stocks.
As of 10:20 a.m. ET on Friday, the stock was down 3.9% on the news.
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Intuitive Surgical delivers strong results
Like clockwork, the maker of the da Vinci surgical robots delivered another strong round of growth up and down the income statement as its razor-and-blades business model and its industry leadership continue to pay off.
Da Vinci procedures in the quarter rose 18%, and it sold 493 surgical systems, up from 415 in the quarter a year ago, bringing its installed base to 9,902, up 15% from a year ago. Overall revenue rose 25% to $2.41 billion, which was well ahead of the consensus at $2.24 billion.
Growth was well balanced between instruments and accessories and surgical systems. And its new Ion Endoluminal System, which does bronchoscopies (lung examinations via a fiber optic camera), is surging with 70% growth in procedure volume.
Results were strong on the bottom line as well, with adjusted earnings per share jumping from $1.60 to $2.21, topping expectations at $1.79.
NASDAQ: ISRG
Key Data Points
Guidance was on the light side
The stock seemed to sell off because its 2025 guidance indicated a slowdown from last year.
Intuitive Surgical expects procedure growth of 13% to 16%, which compared to the Wall Street consensus of 16%, and was below the 17% growth in 2024. Management also sees its adjusted gross margin slipping and adjusted operating expense growth increasing.
Those numbers indicate both a slowdown in revenue growth and narrowing margins, but there's a good chance the guidance is conservative since the company has a history of raising guidance over the course of the year and this is just an initial forecast.
The stock is also expensive, at a price-to-earnings ratio of around 80, though Intuitive Surgical deserves a premium. While that valuation may challenge the stock's growth this year, it still looks like a winner over the long term.
