On Wednesday, Truist Securities increased its price target for shares of Intuitive Surgical (NASDAQ:ISRG) to $640 from $570, keeping a Buy rating on the stock.
The firm highlighted that among large-cap companies, only a few have shown positive performance this year, with Intuitive Surgical and Boston Scientific (NYSE:BSX) standing out. They have outperformed the S&P 500 index, with gains of 62% and 56% respectively, compared to the S&P's year-to-date increase of 27%.
The new price target of $640 is rooted in a valuation approach that applies a price-to-earnings (P/E) multiple of approximately 70.7 times to the adjusted earnings per share (EPS) forecast for 2026.
After adjusting for interest income, the anticipated EPS is $8.62, plus approximately $30 in cash per share. This P/E multiple represents a slight premium over the upper end of Intuitive Surgical's three-year average relative premium range versus the S&P 500, which is between approximately 2.5 to 3.1 times.
The justification for the premium P/E multiple is based on the company's consistent, elevated procedure growth and the proximity of a new product cycle. Intuitive Surgical is recognized as one of the leading innovators in the medical technology sector.
The upcoming product developments are expected to significantly accelerate revenue and EPS growth, potentially surpassing current and consensus estimates for the coming years. InvestingPro subscribers can access 15+ additional exclusive insights and a comprehensive Pro Research Report that provides deep-dive analysis of Intuitive Surgical's growth prospects and valuation metrics.
Truist Securities' assessment reflects confidence in Intuitive Surgical's ability to maintain its strong performance and leverage its innovation capabilities to further its growth trajectory. The firm believes that the stock deserves to be valued at the higher end of its historical range, considering the potential for new products to drive further financial success.
In other recent news, Intuitive Surgical has been the focus of several analyst upgrades and revised forecasts following its strong earnings report. The company reported a 17% year-over-year increase in revenue, reaching $2 billion in the third quarter, driven by an 18% rise in DaVinci procedures and robust system placements.
Mizuho (NYSE:MFG) Securities increased its price target on the company's shares, reflecting anticipation of the market impact from the upcoming launch of the DV5 surgical robot system.
Bernstein SocGen Group also increased its price target for the company's shares, following discussions on the company's macroeconomic outlook and progress on the launch of the DV5 surgical system.
Morgan Stanley (NYSE:MS) upgraded Intuitive Surgical's stock from Equalweight to Overweight, reflecting optimism about the company's long-term prospects in the healthcare robotics sector. Erste Group revised its rating from Hold to Buy, predicting double-digit percentage growth rates in both sales and profits for 2024 and 2025.
Despite pricing pressures in China, Intuitive Surgical is preparing for a broad launch of DaVinci 5 by mid-2025 and plans to expand the Ion system internationally, especially in China and Europe. These are the recent developments for Intuitive Surgical.
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