Intuitive Surgical, Inc. (ISRG): A Bull Case Theory

We came across a bullish thesis on Intuitive Surgical, Inc. on Sustainable’s Substack by SustainableGrowth. In this article, we will summarize the bulls’ thesis on ISRG. Intuitive Surgical, Inc.'s share was trading at $440.94 as of October 7th. ISRG’s trailing and forward P/E were 61.79 and 47.85 respectively according to Yahoo Finance.

Intuitive Surgical is a pioneer in minimally invasive robotic surgery and has built a highly defensible business with steep switching costs. Surgeon training on its robotic systems is time-consuming and costly, creating strong customer stickiness once adoption occurs. The company benefits from a razor-and-blades model, generating recurring high-margin revenue from expensive consumables used in each operation, independent of new robot sales.

Global demand for robotic surgery remains strong across urology, gynecology, thoracic, cardiac, and general surgery, supporting sustained growth. Intuitive has consistently grown system sales above 20% and consumables revenue near 20%, an impressive performance for a business operating for over two decades. Recent share price weakness in the $430 range reflected concerns around potential tariffs affecting margins and the emergence of competitive pressures.

However, these temporary headwinds created an attractive entry point, particularly for long-term investors who recognize the company’s durable competitive advantages, recurring revenue model, and global growth opportunities. The combination of high switching costs, recurring consumable revenue, and a growing global market positions Intuitive Surgical as a compelling investment, with limited downside and strong potential for continued earnings growth. This makes the current period an opportune time to increase exposure to the stock, especially for those who missed prior dips.

Previously we covered a bullish thesis on Intuitive Surgical, Inc. (ISRG) by Kontra Investment Xchange in December 2024, which highlighted the company’s leadership in robotic surgery, strong adoption of the da Vinci Surgical System, and mid-teens market growth. The company's stock price has depreciated approximately by 18.64% since our coverage. The thesis still stands as Intuitive maintains high switching costs, recurring consumable revenue, and strong global growth potential. SustainableGrowth shares a similar perspective but emphasizes temporary tariff-related headwinds and an attractive entry point for long-term investors.

Intuitive Surgical, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 107 hedge fund portfolios held ISRG at the end of the second quarter which was 106 in the previous quarter. While we acknowledge the potential of ISRG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.