Stock market today: S&P 500 drops for fifth day as focus shifts to Powell’s speech
On Monday, Erste Group analysts downgraded Intuitive Surgical stock, which is listed on (NASDAQ:ISRG), from a Buy to a Hold status. This follows a trend where 15 analysts have revised their earnings expectations downward, according to InvestingPro data. The shift in rating is primarily due to the potential negative impact of new tariffs imposed by the United States on products imported from Mexico. According to Erste Group, Intuitive Surgical, which manufactures a significant portion of its instruments in Mexico, is expected to face challenges to its earnings due to these tariffs.
The analysts predict that while sales and profits for Intuitive Surgical are anticipated to rise in 2025, with revenue growth forecast at 15%, the introduction of tariffs will likely affect the company’s profitability, at least in the short term. The tariffs are part of a broader US customs policy that has recently introduced uncertainty into the market, contributing to downward pressure on Intuitive Surgical’s share price, which has declined 7.19% year-to-date despite its strong financial health score on InvestingPro.
Intuitive Surgical is actively evaluating its response to the new US tariffs. The company’s decision-making process in this regard is being closely watched by investors and industry experts, as it will likely influence the company’s financial health and stock performance moving forward. Currently trading at a P/E ratio of 73.12, InvestingPro’s Fair Value analysis indicates the stock is overvalued.
The downgraded rating reflects the analysts’ concerns over the immediate financial impact of the tariffs, despite the expectation of increased sales and profits. Investors are now faced with a more cautious outlook on Intuitive Surgical’s stock, as they consider the potential implications of the US customs policy on the company’s future earnings.
Erste Group’s announcement has put a spotlight on the broader issue of international trade policies and their effects on multinational corporations. Intuitive Surgical’s situation underscores the challenges companies may face when global economic policies shift unexpectedly.
In other recent news, Intuitive Surgical has reported strong financial performance in the fourth quarter of 2024, surpassing expectations with a 10% and 24% beat on revenue and earnings per share (EPS), respectively, according to RBC Capital Markets. Piper Sandler also noted the company’s robust earnings, leading them to increase their price target for Intuitive Surgical shares to $670, while maintaining an Overweight rating. Meanwhile, Bernstein analysts reiterated an Outperform rating with a price target of $700, highlighting a 38% year-over-year increase in EPS to $2.21. Despite these positive outcomes, Truist Securities adjusted their price target down to $605, citing a contraction in the S&P multiple but maintaining a Buy rating due to the company’s potential for revenue and EPS growth acceleration.
Oppenheimer, on the other hand, maintained a Perform rating, expressing caution due to concerns over market saturation and the valuation of the new da Vinci (EPA:SGEF) 5 system. Intuitive Surgical’s procedure volume grew by 18% year-over-year in the fourth quarter, with projections for a 13-16% increase in 2025, as noted by RBC Capital Markets. Piper Sandler anticipates revenue growth of 14.6% year-over-year to $9.571 billion, with adjusted EPS of $8.05 for 2025. The company is also preparing for the mid-2025 broad launch of the da Vinci 5 system, which analysts see as a key growth driver. Additionally, Intuitive Surgical has secured a significant €290 million distribution agreement, expected to close by 2026, to enhance its presence in Italy, Spain, and Portugal.
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