Intuitive Surgical Crushes Q2 Expectations, So Why No Rally?

The world’s second-largest company in the healthcare equipment and supplies industry, Intuitive Surgical (NASDAQ: ISRG), just reported Q2 financials. The results were solid, but not enough to move shares higher. After dipping nearly 4% after-hours on July 22, Intuitive Surgical shares were essentially flat by 8PM EST, possibly reflecting conservative tone in future growth.

Let's we’ll dive into the key details of the company’s Q2 report and gain an updated outlook on Intuitive Surgical shares and what makes it a compelling time to reassess ISRG's potential.

Intuitive Smashes Expectations, But International Markets Show Weakness

Intuitive starts its earnings press releases by detailing a key performance indicator: da Vinci procedure growth. This metric is crucial. Procedure growth leads to recurring revenue from selling instruments, accessories, and services. The figure remained strong at 17%, the same as Q1 and the full 2024 year. For a company as large as Intuitive, seeing this growth rate remain stable is a significant positive.

On the top line, Intuitive reported Q2 sales of $2.44 billion, representing a growth rate of more than 21% from the prior year quarter. This figure beat Wall Street estimates by approximately $90 million, exceeding expectations of 17% growth. The bottom-line figures also came in strong. Intuitive posted adjusted net income per diluted share of $2.19, an increase of 23%. Analysts expected just $1.92, or a growth rate of just 7.9%.

The company increased its 2025 full-year guidance on many fronts, including a 25 basis point boost to da Vinci procedure growth expectations. The number now comes in at a midpoint value of 16.25%. Intuitive also boosted its adjusted gross margin forecast by 75 basis points at the midpoint to 66.5%, mainly due to a lowered estimated tariff impact on gross margins from 1.7% to 1%.

Another positive sign came from the company’s latest da Vinci 5 systems. The company placed 180 of these in the quarter, an increase of 157% from a year ago, showing that interest in the new product is strong and growing.

One of the bigger negatives of the report came in the company’s system placements outside the United States where international placements of all systems fell to 179 from 192 a year ago. Budgetary pressures on governments in Japan, China, and Europe impacted this.

Bullish Long-Term Outlook Thanks to Reasonable Valuation & Tailwinds Result

As of the July 22 close, Intuitive Surgical trades at a forward price-to-earnings (P/E) ratio of 64x. That’s around 11% higher than its average forward P/E over the last five years. This indicates that the stock isn’t cheap, but it’s also not massively overvalued.

All-in-all, the long-term outlook on Intuitive Surgical continues to be strong. The company beat or met expectations on most of its key metrics.

The argument that the robotics-assisted surgery market is under-penetrated still holds, providing a long-term runway for the company to expand, especially outside the United States. Over time, budget issues in other countries should resolve themselves, giving the company a chance to speed up its international growth. During the last quarter, Intuitive opened a new factory in Bulgaria, which sets the firm up to meet international demand in the future.

Intuitive has two other robots outside of its core da Vinci systems, and they are growing much faster: Ion and SP SureForm 45 stapler.

While da Vinci SP saw procedure growth increase by 88% last quarter, Ion lung biopsy robot procedure growth increased by 52%. This all goes back to growing the company’s recurring revenues, which are predictable and higher margin. The brisk growth of these products shows the company’s ability to innovate to create new revenue streams. In April 2025, the FDA approved the SP SureForm 45 stapler, the first stapler cleared for single-port robotic use, enabling more efficient thoracic, colorectal, and urologic surgeries. These milestones demonstrate Intuitive’s prowess in expanding its robotic ecosystem.

Analysts See 16% Near Term Upside, And That Figure Could Get A Jolt

Before the release of updated price targets post-earnings, the MarketBeat consensus price target on Intuitive Surgical was just under $593, implying solid upside of 16%.

It wouldn’t be surprising to see analysts raise their price targets after the results, as the company beat expectations.

This could indicate a significantly higher amount of near-term upside potential to go along with the stock’s bullish long-term outlook.

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