With profits exploding and concerns about the number of surgeries in the US, Xiaoma maintained an “increase” in Intuitive Surgery (ISRG.US) and raised the target price to $475

According to the Zhitong Finance App, Intuitive Surgical, ISRG.US (Intuitive Surgical, ISRG.US), a leading global surgical robot company, released its 2026 three-quarter report on October 20, EST. J.P. Morgan Chase released a research report on the same day, maintaining the stock's “gain” rating and raising the target price to 475 US dollars. The bank said that in the soft tissue robotics circuit, which is growing rapidly and the penetration rate is still low, intuitive surgery is the company with the most favorable layout. According to the data, the company's overall revenue, profit, and gross margin significantly outperformed market expectations, but the core indicator, the volume of surgery in the US only met consistent expectations and failed to meet the buyers' agencies' optimistic expectations, and the stock price came under pressure after the earnings report was released.

Profits are in full swing, and the hardware installation performance is impressive

According to financial data, the company's total revenue for the third quarter was 3,049 billion US dollars. System equipment revenue was 769 million US dollars, up 30% year on year; 546 da Vinci systems were installed globally, up 28% year on year, and 315 new generation dV5 models were installed, which was significantly higher than previous agency forecasts. Installed capacity in the US and overseas markets both achieved more than expected growth, and the expansion of the Outpatient Surgery Center (ASC) channel has achieved remarkable results.

Continued revenue from supplies and services was also strong. Equipment and consumables (I&A) revenue was US$1.8 billion, up 18% year on year; service revenue was US$482 million, up 22% year on year. On the profit side, the adjusted EPS reached 3 US dollars, which was 0.36 US dollars higher than market expectations, an increase of 14%; gross margin rose to 69.9%, and the operating profit margin exceeded expectations by 230 basis points. The company completed a share repurchase of approximately US$3 billion this quarter, while raising the annual gross margin guide to 68.7%-69.3%. However, GAAP EPS was only $1.49, mainly hampered by the $450 million antitrust settlement and one-time pre-tax deduction.

The number of surgeries in the US falls short of optimistic expectations, and overseas markets have become an engine of growth

The volume of surgery is the core KPI that determines the valuation of intuitive surgery. The global volume of da Vinci surgeries increased 14% year over year, but the growth rate of surgery in the US was only 10%, only flat market expectations and 1-2 percentage points lower than buyers' optimistic expectations, which was also the main factor suppressing stock prices. Affected by the high base, the utilization rate of equipment in the US declined somewhat from month to month, and the weight loss surgery business experienced a low double-digit decline.

In contrast, overseas markets showed strong performance. Da Vinci's overseas surgery volume increased 20% year over year, Europe and Asia blossomed more, India's growth rate reached 42%, and Japan's improved reimbursement policy accelerated for two consecutive quarters. The growth rate of business in China is at the same level as the company's overall average, but it is constrained by the weak capital installation environment. Management narrowed the annual Da Vinci surgery growth rate guidelines to 14%-15%.

The impact of price adjustments is manageable, and institutions suggest a pullback buying strategy

The company introduced a new pricing plan for extended use of devices, combined with price cuts in the Chinese market. After the policy is fully implemented, revenue from consumables for a single operation is expected to withstand 3-5% pressure, and the impact is lower than 7% in 2020. The price adjustment will be implemented in stages, and the full impact will only be gradually released in 2027. Based on historical experience, management believes that lower prices are expected to release elasticity in demand, and that cost cuts can hedge against pressure on gross margins.

J.P. Morgan notes that the 74% fluctuation in the company's stock price comes from the fundamentals of individual stocks themselves. Although the overall quality of the financial report is high, the stock price in the early period has been boosted by optimistic data from a third party, and it is expected that the stock price will adjust reasonably by 3-5%; if the opening of the market falls further by about 7%, it is a good buying window. In the long run, the penetration rate of soft tissue surgery robots is still low. Combined with new indications and overseas market expansion, the company still has broad room for growth. Risks focus on new product development, competitive impact, and product safety incidents.

As of the close of trading on October 20, Intuitive Surgery reported 438 US dollars, with a market capitalization of about US$158.8 billion. The 52-week stock price range was 328.57-603.88 US dollars.