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

We came across a bullish thesis on Intuitive Surgical, Inc. on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on ISRG. Intuitive Surgical, Inc.'s share was trading at $573.48 as of November 28th. ISRG’s trailing and forward P/E were 75.86 and 60.24 respectively according to Yahoo Finance.

Intuitive Surgical has established itself as a global leader in robotic-assisted surgery, transforming complex procedures with its da Vinci system, now used in over 17 million operations across 74 countries. The company has built an entire surgical ecosystem, from hospital workflows and surgeon training to recurring revenue from instruments, accessories, and service contracts, giving it an estimated 60–70% market share in soft-tissue robotics.

This dominance, combined with a razor-and-blade business model, provides high-margin, predictable revenue, with 85% of its nearly $10 billion annual revenue now recurring. Intuitive’s growth has been driven by a combination of installed base expansion, rising procedure volumes, global geographic reach, and continual product innovation, including the da Vinci 5 system and emerging platforms like Ion. Despite rising competition from Medtronic, CMR Surgical, Johnson & Johnson, and others, Intuitive’s ecosystem, regulatory approvals, and surgeon lock-in create a durable moat that remains difficult to challenge.

Financially, the company has grown revenues at a 15% CAGR over the last decade, maintains near 70% gross margins, generates over $1 billion in free cash flow annually, and operates with virtually no debt. Recent quarters show continued strong system placements, 21% recurring revenue growth, and stable margins despite modest tariff and cost pressures. Long-term secular tailwinds, including the global shift toward minimally invasive surgery and procedure expansion into new specialties, support low double-digit to mid-teens growth for the foreseeable future.

Valuation, however, is rich, with shares trading around 50× earnings and only modest upside from current levels. While Intuitive remains a must-own high-quality compounder in healthcare, the stock is attractive primarily at lower entry points, with an accumulation target near $380 per share to balance risk and reward.

Previously we covered a bullish thesis on Intuitive Surgical, Inc. (ISRG) by Kontra Investment Xchange in December 2024, which highlighted the company’s da Vinci Surgical System, mid-teens growth in robotic surgery, and recurring revenue from instruments and services. The company's stock price has appreciated approximately by 5.80% since our coverage. The thesis still stands as Intuitive maintains its leadership. Kontra Investment Xchange shares an identical view but emphasizes AI integration.

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.