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On Wednesday, Leerink Partners adjusted the price target for Intuitive Surgical stock, listed on (NASDAQ:ISRG), to $539 from the previous target of $633, while maintaining an Outperform rating. With a current market capitalization of $171.5 billion and trading at $478.74, InvestingPro analysis indicates the stock is trading above its Fair Value, with a P/E ratio of 74.5x reflecting high growth expectations. The revision comes after Intuitive Surgical’s first-quarter earnings for 2025, which revealed worldwide sales of $2.25 billion, a 3% increase compared to consensus estimates. Despite worldwide system placements falling short of expectations, primarily due to overseas market weaknesses, the average selling price for systems was higher than anticipated due to a growing mix of the da Vinci (EPA:SGEF) 5 (DV5) systems. This increase helped push system sales 7% above consensus. InvestingPro data shows the company maintains impressive revenue growth of 17.2% over the last twelve months, with an excellent financial health score of 3.09 out of 5.
The company’s updated full-year 2025 guidance now includes the effects of all recently implemented and announced tariffs. These tariffs are expected to raise the cost of goods sold (COGS) by 1.7% of sales, which translates to an approximate 30 basis point variance, and lower the forecasted gross margin to between 65% and 66.5%, down from the previous range of 67% to 68%.
Despite the challenging macroeconomic climate and the potential risks to fiscal year 2025 placements due to global capital spending concerns, Leerink Partners sees reasons for optimism in Intuitive Surgical’s performance. The firm’s updated guidance also indicates a higher expected worldwide procedure growth rate for FY25, now set at 15-17%, compared to the earlier projection of 13-16%.
Leerink Partners suggests that the underlying fundamentals for Intuitive Surgical remain relatively strong. The firm’s analyst advises that the current stock volatility presents a buying opportunity, recommending investors to acquire shares during any perceived weakness. The reiterated Outperform rating signals Leerink Partners’ positive outlook on Intuitive Surgical’s stock performance going forward. Analyst targets currently range from $350 to $700, with InvestingPro offering 13 additional key insights and a comprehensive Pro Research Report for deeper analysis of this robotic surgery leader.
In other recent news, Intuitive Surgical reported a strong financial performance for the first quarter of 2025, with revenues reaching $2.25 billion, marking a 19% increase year-over-year. The company’s earnings per share (EPS) stood at $1.81, surpassing analyst expectations of $1.74. Despite these positive results, several analyst firms have adjusted their price targets for Intuitive Surgical. BTIG revised its target to $542, maintaining a Buy rating, while Jefferies lowered its target to $530, keeping a Hold rating, and Evercore ISI set a target of $470 with an In Line rating.
The company sold 147 units of its da Vinci 5 (Dv5) surgical systems, slightly below expectations, but procedure growth exceeded forecasts by approximately 240 basis points. Intuitive Surgical has raised its full-year 2025 procedure growth forecast to a range of 15-17%, up from the previous 13-16%. However, the company faces challenges from tariffs, which are expected to impact gross margins by approximately 170 basis points. Analysts have noted that tariff impacts and international capital expenditure pressures remain concerns for the company.
Intuitive Surgical’s management highlighted the robust adoption of the Da Vinci 5 system and consistent utilization growth across key platforms. The company is also focused on mitigating the effects of tariffs through enhanced manufacturing efficiencies. Despite a decline in stock value since the last earnings call, analysts like BTIG’s Ryan Zimmerman have emphasized the strong underlying demand for Intuitive Surgical’s procedures. The company’s strategic focus remains on expanding its surgical systems and increasing procedural volumes, particularly in international markets.
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