Intuitive Surgical To Benefit From The Increased Dependence On Surgical Robots In Cardiac And Lung Surgeries

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Intuitive Surgical

According to Hexareports, an aging U.S. population and a strong demand for surgical robots for heart and lung surgery will drive cardiac and lung surgical robots’ penetration in the top five U.S. hospitals to 100% over the next five years. Although advantages of robotic surgery over conventional surgery has been widely debated, it benefits patients with smaller incisions, resulting in less pain, scarring and blood loss. Also, surgeons get more flexibility and control to perform complex surgeries with better accuracy using surgical robots. Going ahead, these benefits are expected to increase the demand for surgical robots. We believe that being the market leader in surgical robots, Intuitive Surgical will be a clear beneficiary of the accelerating demand. Below we analyse the impact of the aforementioned trend on the company’s value.

Our price estimate of $500 for Intuitive Surgical is slightly lower than its current market price.

See our complete analysis for Intuitive Surgical here

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Intuitive Surgical To See Growth From Surgical Robots For Cardiac And Lung Surgeries

Hexareports estimates the market size of cardiac and lung surgical robots to grow by approximately 30 times by 2021. Considering that cardiothoracic surgeries as a percentage of the total procedural volumes was almost negligible for Intuitive Surgical in 2014, there stands a significant growth opportunity for the company in this segment. Also, the company can see a further rise in procedural volumes by increasing its focus to equip the daVinci surgical systems for lung surgeries, a market where Intuitive is yet to enter.

Furthermore, as procedure volumes grow, the demand for da Vinci surgical system units is likely to increase, as many new hospitals and healthcare institutions would be encouraged to buy the systems, while existing customers could be incentivized to trade-in old machines and add more capacity. The sale of related instruments and accessories will also rise with growth in procedure volumes as instruments have a limited useful life, after which they need to be replaced.

Increase In daVinci Surgical System Units Sold: 5% upside

We currently forecast the number of daVinci surgical system units sold by Intuitive Surgical to grow from 430 in 2014 to 660 by the end of our forecast period. However, if the surgical robots market for cardiac and lung surgeries grows as expected by Hexareports and the company is able to expand its market share in the segment, there exists a significant growth opportunity for Intuitive Surgical. If the company is able to successfully capitalize on this opportunity and grow the number of units of daVinci systems sold to 750 by the end of our forecast period, there can be 5% upside to our price estimate.

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