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Intuitive Surgical (ISRG) Just Grew Revenue 22%. Why Is the Stock Still Down This Year?
Key Points
Intuitive Surgical is a giant in its field.
It faces growing competition.
But it's still growing well and expanding its scope.
The more investing experience you have under your belt, the less surprised you'll be by things that don't seem to make sense. For example, robotic surgery giant Intuitive Surgical (NASDAQ: ISRG) reported its third-quarter earnings on Oct. 20, featuring revenue up 22% year over year, to $3 billion, but its share price over the past year is down 17% (as of Nov. 5).
What gives? Well, over the past month, the stock is up 15%. So Intuitive's good performance was recognized. But why the decline in the first place? Well, there are several explanations.
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Intuitive Surgical's challenges
Here are some investor concerns:
- Intuitive's machines are helping with bariatric surgery for overweight people, and that use has been growing, but growth would likely be stronger if GLP-1 weight-loss drugs weren't also super popular.
- The company faces increasing competition from the likes of Medtronic (NYSE: MDT) and Johnson & Johnson (NYSE: JNJ).
- Several (but not all) Wall Street analysts have downgraded their ratings for the company over the past year.
- While Intuitive is selling some refurbished systems and supplies, it's not the only company refurbishing and selling its used parts.
- Intuitive's valuation has long been on the rich side, which has kept some investors away.
Intuitive Surgical's strengths
On the other hand, there's a lot to like about the company:
- It has been updating its offerings -- such as with its next-generation platform -- and they have been well received. Its newer ION system, for example, saw its installed base grow.
- It's successfully expanding into different kinds of surgeries, such as bronchoscopies, and each new direction can spur further growth.
- It actually doesn't get most of its revenue from the sale of its costly surgical systems. Instead, most revenue -- around 75% of it -- is from the sale of servicing, supplies, and accessories, which are needed for ongoing use of its installed systems.
- Despite competition, it's still growing well. Its third quarter featured Intuitive Surgical selling more of its flagship da Vinci systems than it did in the same quarter of 2025.
- It has built a sticky ecosystem, with more than 12,000 surgical systems installed in more than 70 countries. For any hospital to switch to a rival's offering would be a costly and troublesome endeavor, requiring staff retraining, among other things.
Long-term investors may want to take a closer look at Intuitive Surgical, but remember that, should the market pull back sharply, growth stocks like this can pull back even harder. That's why investors should be planning to hold for many years.
Selena Maranjian has positions in Intuitive Surgical. The Motley Fool has positions in and recommends Intuitive Surgical and Medtronic. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.