Despite significant disruption from the pandemic and macroeconomic headwinds, Intuitive Surgical (ISRG 2.68%) has performed well over the past five years both as a company and as a stock. The company's shares have outpaced broader equities over this period.
However, a lot is changing within Intuitive Surgical's competitive landscape. Can the medical device leader still perform well over the next five years? Let's find out how things might unfold for the company through 2031.
Image source: Getty Images.
The da Vinci 5 will make progress
Intuitive Surgical is best known for its da Vinci systems, robotic-assisted surgery (RAS) devices that help physicians perform minimally invasive surgical procedures. In 2024, the company earned clearance for the fifth generation of this famous system. The rollout of the da Vinci 5 is still ongoing, but over the next five years, we could see it gain significantly more traction. Intuitive Surgical will launch software updates and other upgrades for the da Vinci 5 based on real-world data and physician feedback. The device should also earn additional indications for its use over the years.
This matters for Intuitive Surgical's prospects, as it will help boost its installed base and procedure volume, which are important drivers of revenue growth. Intuitive Surgical makes the majority of its revenue from instruments and accessories needed for the da Vinci systems, as well as servicing the devices and training. The more of its devices are out in hospitals and medical offices, the more surgeries are performed with it, and the more instruments and accessories it sells, and the more servicing and training are needed. Intuitive Surgical's work with the da Vinci 5 should be an important thing to watch over the next five years, though its older devices will still play a role.
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There will be even more competition
Intuitive Surgical has had little competition over the past couple of decades. That is now changing. Last year, Medtronic received U.S. Food and Drug Administration clearance for its Hugo RAS system for urologic procedures, an indication for which the da Vinci system is also approved. Medtronic won't stop there. It is already running additional clinical trials, including in hernia repair, to expand the device's approved indications.
By 2031, Medtronic's Hugo will likely have a much longer list of approved indications. Then there is Johnson & Johnson, which is inching closer to earning approval for its own robot device, the Ottava system. These new devices could steal some market share from Intuitive Surgical and put pressure on revenue and earnings growth over the next five years.
Is Intuitive Surgical stock a buy?
Even with mounting competition, Intuitive Surgical could produce strong returns over the medium term. Here are two reasons why. First, the RAS market is underpenetrated. More competition might help drive broader adoption of robot systems, which would be good for Intuitive Surgical and its peers. Second, Intuitive Surgical arguably benefits from a wide moat. It already has a vast installed base and real-world data demonstrating its value for patient outcomes.
It will remain a serious option for hospital systems looking to invest in a new RAS system, while its existing customers are likely to stay put given the device's high switching costs. For these reasons (and more), Intuitive Surgical is an attractive stock to hold through 2031.
