Intuitive Surgical ISRG is set to release second-quarter results on July 16. The Zacks Consensus Estimate for sales is pegged at $2.81 billion, indicating year-over-year growth of 15%, and the same for earnings per share (EPS) implies an improvement of 13.2% to $2.48. The estimate for EPS has remained stable over the past seven days.
In the last reported quarter, Intuitive Surgical delivered an earnings surprise of 20.19%. The company’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.82%.
Although ISRG’s top and bottom-line figures are likely to reflect strong growth during the second quarter, its shares have underperformed the Zacks Medical - Instrument industry as well as other robotic-surgery device makers — Stryker SYK, Zimmer Biomet ZBH, Globus Medical GMED and Stereotaxis STXS — so far this year. The stock has declined 27.4%, its industry has dipped 14.2%, and the S&P 500 Index has gained 9.5% in the same period. The share prices of SYK, ZBH, GMED and STXS have decreased 6.9%, 0.8%, 12.2% and 24.4%, respectively.
YTD Price Performance
While Stryker commercializes its Mako robotic system for orthopedic joint replacements, Zimmer Biomet has ROSA system, which is available for orthopedic and neurosurgical procedures. Globus Medical and Stereotaxis’ robotic portfolios include ExcelsiusGPS and Genesis systems, respectively, used for spine and cranial procedures, and endovascular interventions.
The underperformance of the ISRG stock has led to a decline in its valuation multiples as well. The Price-to-Earnings Forward 12 Month (P/E F12M) valuation has fallen from a high of 96.05X at the beginning of 2025 to its current 37.12X, reflecting a significant decline despite robust earnings growth. At its current valuation multiples, the ISRG stock looks attractive amid its strong fundamentals.
P/E F12M Valuation of ISRG vs Industry
Why Investors Are Selling ISRG Stock
Despite consistently delivering double-digit revenue and earnings growth, Intuitive Surgical stock has remained under pressure this year as investors weigh near-term margin headwinds against its long-term growth story. The biggest concern stems from the ongoing rollout of the next-generation da Vinci 5 platform.
Although customer adoption has exceeded expectations, the system currently carries lower margins than the mature Xi platform due to higher manufacturing, service and support costs. The company also expects elevated trade-in activity as hospitals replace older systems with da Vinci 5, creating an additional drag on profitability. Management further expects faster growth of newer da Vinci 5 and Ion platforms, along with higher depreciation from recent manufacturing expansions, to keep gross margins under pressure in 2026.
Tariffs, higher freight expenses and rising semiconductor memory costs are expected to increase input costs through the remainder of the year, while management continues to monitor potential supply constraints across components. Internationally, China remains a difficult market due to lower tender activity, domestic competition and pricing pressure, while Japan continues to face slower capital placements despite supportive reimbursement initiatives.
Investors are also watching the impact of GLP-1 obesity drugs, which continue to reduce bariatric procedure volumes. Although none of these challenges materially alter Intuitive Surgical’s long-term outlook, they have contributed to weaker investor sentiment and multiple compression in recent months. The entry of both large and smaller players, including Stryker, Zimmer Biomet, Globus Medical and Stereotaxis, into the robotic surgery market could intensify competition over time and erode ISRG's market share.
The Bull Case: What Drives ISRG's Prospect?
While short-term concerns have weighed on the stock, Intuitive Surgical's underlying business remains exceptionally strong. The company continues to generate robust financial performance, reporting 23% revenue growth and a 36% increase in adjusted earnings during the first quarter of 2026, supported by 17% overall procedure growth across its da Vinci and Ion platforms.
Recurring revenues accounted for 86% of total sales, highlighting the resilience of its business model. Higher utilization of installed systems continues to drive high-margin instruments, accessories and service revenues, creating a recurring revenue stream that becomes increasingly valuable as the installed base expands. U.S. da Vinci utilization increased 4% during the first quarter, while utilization of da Vinci 5 systems remains approximately 11% higher than the legacy Xi platform.
The da Vinci 5 upgrade cycle is likely to remain Intuitive Surgical's biggest growth catalyst over the next several quarters. Customer adoption has been stronger than expected, with nearly 1,500 da Vinci 5 systems installed and approximately 13,000 surgeons already using the platform. Hospitals continue to upgrade their older systems, reflected by a sharp increase in trade-ins.
da Vinci Market Opportunity
Image Source: Intuitive Surgical
New Force Feedback instruments, additional FDA clearances and ongoing software enhancements are expected to improve clinical outcomes and further accelerate adoption. Intuitive Surgical continues to invest heavily in AI-enabled capabilities through its digital ecosystem. The company is leveraging surgical video, robotic data, force-feedback information and electronic medical records to develop AI-powered anatomy identification, decision support, workflow optimization and, eventually, augmented dexterity and automation.
Combined with rapid growth in the Ion lung biopsy platform, expanding SP procedures, rising international adoption and a growing installed base, these innovations provide multiple long-term growth drivers that reinforce Intuitive Surgical's leadership in robotic-assisted surgery.
Earnings Beat Likely
Our proven model predicts an earnings beat for ISRG this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($2.55) and the Zacks Consensus Estimate ($2.48), is +2.78%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Conclusion
Although near-term margin pressure from the da Vinci 5 rollout, tariffs and higher input costs has weighed on investor sentiment, Intuitive Surgical's long-term investment thesis remains intact. The company continues to deliver industry-leading procedure growth, expanding recurring revenues, increasing system utilization, and driving strong adoption of its newest robotic platforms while building a differentiated AI-enabled surgical ecosystem.
ISRG Short-Term Price Target
With consistent strong execution and valuation multiples that have compressed significantly from its 2025 peak to around 37.1X despite healthy earnings growth, ISRG's valuation appears considerably more attractive than it was earlier this year. For long-term investors seeking exposure to robotic surgery, the recent pullback presents an opportunity to accumulate shares of a company with durable competitive advantages and robust growth fundamentals. Moreover, an expected earnings beat in the second quarter, along with its favorable rank, makes it an attractive bet before its second-quarter earnings release.
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Intuitive Surgical, Inc. (ISRG): Free Stock Analysis Report
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