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On Thursday, Erste Group analysts upgraded Intuitive Surgical stock (NASDAQ: NASDAQ:ISRG) from Hold to Buy. Currently trading at $557.95 with a market capitalization of $200 billion, the company has demonstrated strong revenue growth of 19% over the last twelve months. The analysts foresee an uptick in turnover and profits for the company in 2025, despite a slowdown in profit growth this year caused by new tariffs on products primarily manufactured in Mexico.
The analysts anticipate that while profit growth may be constrained this year, the operating margin is expected to improve in 2026. With a robust return on equity of 16% and an impressive gross profit margin of 67%, the company maintains strong fundamentals. This improvement is expected to coincide with a significant increase in profit growth. According to InvestingPro, the company’s overall financial health score is rated as "GREAT."
The tariffs, which have impacted the company’s current year profitability, are not projected to have a long-term negative effect, as the company is expected to recover and accelerate its growth.
Erste Group expressed optimism about the company’s future, predicting that the share price will rise further due to the anticipated growth acceleration. The analysts’ upgrade reflects confidence in the company’s ability to navigate the current challenges and achieve long-term growth.
Intuitive Surgical, known for its advanced surgical systems, is poised for a promising future as it adapts to market conditions and leverages its strengths to drive growth.
In other recent news, Intuitive Surgical has announced several significant developments. The company reported a strong first quarter with a 17% increase in procedure growth, leading to an updated annual procedure growth guidance of 15-17% for 2025. Stifel analysts have maintained a Buy rating for Intuitive Surgical, despite anticipated tariff impacts on gross margins, which are expected to be around 65%-66.5% for the year. Additionally, Intuitive Surgical has expanded its stock repurchase program to $4 billion, a move seen as enhancing shareholder value and leading Wolfpack Research to take a long position on the company.
In leadership changes, Dave Rosa will become the new CEO on July 1, 2025, as part of a planned succession strategy, with Gary Guthart transitioning to Executive Chair of the Board. The FDA has also approved the da Vinci (EPA:SGEF) Single Port surgical system for colorectal surgery, expanding its applications in minimally invasive procedures. Intuitive Surgical’s decision to insource the production of surgical drapes has impacted UFP Technologies, a company previously reliant on Intuitive as its largest customer. This strategic shift has led to challenges for UFP Technologies, as highlighted by Wolfpack Research, which has taken a short position in the company.
These developments, including leadership changes, strategic investments, and FDA approvals, underscore Intuitive Surgical’s ongoing efforts to enhance its market position and operational efficiency.
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