Intuitive Surgical (ISRG 2.67%), a medical device specialist, faced significant issues last year, especially as its business struggled amid President Donald Trump's strict trade policies.
The healthcare giant is facing more problems this year. Intuitive Surgical's shares recently fell as the market was unimpressed with its latest quarterly update. However, this could be a decent opportunity to pick up the company's shares on the dip.
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Guidance was weak
Intuitive Surgical performed well, all things considered, in the fourth quarter of 2025. The company's revenue grew 19% year over year to $2.87 billion, while the volume of procedures performed with its famous da Vinci system increased 17%. The company also made progress on the bottom line, with earnings per share of $2.21, up 17.6% year over year.
Despite strong results, Intuitive Surgical's guidance for its fiscal 2026 is what scared investors. The company expects da Vinci procedure volume to grow between 13% and 15% this year, compared to 18% in 2025.
This metric is an important driver of revenue growth. The more surgeries performed with the company's da Vinci system, the more instruments and accessories it can sell. That's Intuitive Surgical's bread and butter.
So, slower procedure volume growth likely means slower top-line growth, something investors don't want to see for a stock that seems practically priced for perfection. Intuitive Surgical is trading at 54 times forward earnings, well above the 18.6 average for healthcare stocks.
NASDAQ: ISRG
Key Data Points
Why Intuitive Surgical is still a buy
Although growth may slow down this year, Intuitive Surgical has attractive long-term prospects. The robotic-assisted surgery market, which it leads, remains underpenetrated even in its current state. That's before we take into account long-term tailwinds, such as the world's aging population, which will drive demand for many procedures, including some that the da Vinci system helps perform.
Intuitive Surgical benefits from a wide moat, due to high switching costs and significant barriers to entry in the industry, not to mention the vast amount of real-world data on its devices that show they help improve patient outcomes.
But what about valuation? Note that Intuitive Surgical appears less overvalued once we factor in expected growth. The company's price/earnings-to-growth multiple is 3.2. That's still above the reasonably valued range (typically below 2), but for a company with Intuitive Surgical's prospects and competitive advantage, it's not prohibitively expensive, in my view.
The medical device leader could experience near-term volatility. However, over the long run, Intuitive Surgical still looks like an attractive stock to buy and hold.
