On Friday, Piper Sandler analyst Adam Maeder increased the price target on Intuitive Surgical (NASDAQ:ISRG) shares to $670 from the previous $538 while maintaining an Overweight rating on the stock. The adjustment follows Intuitive Surgical's fourth-quarter earnings report, which exceeded consensus expectations for both revenue and earnings. Currently trading at $608.66, near its 52-week high of $616, InvestingPro analysis suggests the stock is trading above its Fair Value, with an impressive 64.47% return over the past year.
Intuitive Surgical, a leader in robotic-assisted surgery, reported its full fourth-quarter results, showcasing a strong finish to the year. The company's management also reaffirmed its procedure guidance for the year 2025, projecting a year-over-year increase of 13-16%. Additionally, Intuitive Surgical provided initial gross margin (GM) guidance of 67-68%, slightly below Piper Sandler's estimate of 68.7%, and operating expense growth guidance of 10-15% year-over-year, compared to their 14.3% projection. The company maintains robust financial health with a current ratio of 4.3, indicating strong liquidity.
Despite the gross margin guidance falling short of expectations, the firm believes these dynamics are temporary and expects gross margins to return to over 70% in the mid-term. Piper Sandler's updated financial model for Intuitive Surgical anticipates revenue growth of 14.6% year-over-year to $9.571 billion and adjusted earnings per share (EPS) of $8.05, marking a 10% increase year-over-year for 2025. These figures are deemed highly achievable and possibly conservative by the analysts. InvestingPro data shows the company has maintained strong momentum with a 14.83% revenue growth in the last twelve months. Get access to 18 additional ProTips and comprehensive financial analysis with an InvestingPro subscription.
Maeder expressed confidence in Intuitive Surgical's market position, describing the company as the premier large-cap medtech asset. The expectation is that the company will continue its pattern of beating estimates and raising forecasts, particularly with the launch of the new Da Vinci (EPA:SGEF) 5 (DV5) surgical system. The reiterated Overweight rating and elevated price target reflect Piper Sandler's positive outlook on Intuitive Surgical's stock performance moving forward. With an overall Financial Health score of "GREAT" according to InvestingPro, the company demonstrates strong fundamentals despite trading at a high P/E ratio of 95.85.
In other recent news, Intuitive Surgical reported impressive fourth-quarter results, with a GAAP earnings per share (EPS) of $1.88, exceeding both Oppenheimer's estimate of $1.64 and the consensus estimate of $1.42. The company also secured a distribution agreement worth €290 million, expected to close by 2026, which will enable a direct presence in Italy, Spain, and Portugal. Despite these positive developments, Oppenheimer maintained a Perform rating on the company's stock, citing concerns of market saturation and uncertainty around the new dV5 system.
Several analyst firms, including Bernstein, Truist Securities, Deutsche Bank (ETR:DBKGn), BTIG, and Raymond (NSE:RYMD) James, have upgraded their price targets for Intuitive Surgical following the strong earnings report. Bernstein analysts believe the company's growth prospects are supported by five transformational product cycles poised to accelerate in the near future. Despite forecasted headwinds, such as the impact on currency exchange revenue and a higher tax rate, analysts remain optimistic about the company's growth prospects.
In other recent developments, the company's average selling price for its systems rose to $1.59 million, driven by a higher mix of its advanced da Vinci 5 (dV5) surgical systems. The company placed 174 dV5 systems in the United States during the fourth quarter, which represented 61% of its total U.S. placements for the period. A full-scale launch of the dV5 system is anticipated around mid-year. These are the recent developments in the company's journey.
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