Can Intuitive Surgical Stock Outperform The Broader S&P 500 After Coronavirus?

by Trefis Team
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Intuitive Surgical
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Intuitive Surgical (NASDAQ:ISRG) stock has fared better than the broader markets through the current crisis, and it will likely bounce back strongly and potentially outperform the broader markets, when the crisis winds down. For perspective, the stock rose over 300% between March 2009 and January 2010, compared to a 48% rise for the S&P – something we detail in our interactive dashboard analysis on 2007-08 vs. 2020 Crisis Comparison: Intuitive Surgical’s Stock Compared To The S&P 500

On Thursday, March 12, the stock markets saw their biggest sell off since the 1987’s Black Market. There were two distinct trends driving the sell-off. Firstly, the increasing number of coronavirus cases outside China is causing mounting concerns of a global economic slowdown. Secondly, crude oil prices plummeted by more than 30% after Saudi Arabia increased production. Intuitive Surgical stock fell 18% over the last 4 trading sessions, considering the impact that the Coronavirus outbreak and a broader economic slowdown could have on its supply chain.  The overall decline in procedures in China is the key cause of concern for Intuitive Surgical in the near term. In this analysis, we take a look at how the company’s stock reacted to the economic crisis of 2008 and compare its performance with the S&P 500.

Intuitive Surgical has seen strong revenue growth over the past few years, led by increased adoption of its robotic surgical devices across the globe. There are more number of procedures performed on the company’s robotic systems each year resulting in a higher installed base. This trend is expected to continue in the coming years. Intuitive Surgical’s stock has declined 25% from the recent highs of $618 on Feb 20, 2020 to under $460 currently. We estimate the fair value for  Intuitive Surgical’s stock price to be $652, reflecting upside from the current levels.

Intuitive Surgical Stock vs. S&P 500 Performance During 2020 Coronavirus/Oil Price War Crisis

  • Intuitive Surgical’s stock declined by about 18% between Monday, March 9th, and Thursday, March 12th, and the stock is down by about the same 18% since February 1 as well, after the WHO declared a global health emergency.
  • The S&P 500 declined by 16.5% between Monday, March 9th, and Thursday, March 12th, and it has fallen by 25.4% since February 1, after the global health emergency was declared by the WHO.

View our analysis for 2007-08 vs. 2020 Crisis Comparison on Medtronic, Abbott and Boston Scientific.

Intuitive Surgical Stock vs. S&P 500 Performance Over 2007-08 Financial Crisis

  • ISRG stock declined from levels of around $77 in October 2007 (the pre-crisis peak) to levels of around $30 in March 2009 (as the markets bottomed out) and recovered to levels of about $101 in early 2010.
  • Through the crisis, BSX stock declined by as much as 60% from its approximate pre-crisis peak. This marked a steeper decline as seen in the broader S&P, which fell by as much as 51%.
  • The stock saw massive recovery from the lows, rising by over 300% between March 2009 and January 2010. The growth was much higher than the S&P, which rose by about 48% over the same period.

Conclusion

While Intuitive Surgical’s stock has declined due to the Coronavirus/Oil Price War crisis, going by trends seen during the 2008 slowdown, it’s likely that it could bounce back strongly, when the crisis winds down, and the growth from lower levels could potentially be much faster than the broader S&P.

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