Intuitive Surgical Stock To Bounce Back After A 3% Fall In A Week?

by Trefis Team
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[Updated: Sep 16, 2021] ISRG Stock Decline

Last month we discussed that the stock price of Intuitive Surgical (NASDAQ:ISRG) is likely to see higher levels going by its historical performance, despite it being richly valued at levels of over $1,000. The stock continued to make new highs with levels of $1,087 seen as recently as last Wednesday. However, the stock has since declined over 3% to levels of $1,045 currently. Much of this decline came after bearish commentary from the company’s executives at an event. The rise of Covid-19 cases is likely to again impact the overall procedure volume in the near term, while there are also concerns over increasing costs for the company. Despite the recent decline, ISRG stock is up 31% year-to-date, outperforming the broader indices with the S&P500 rising 21%. But will ISRG stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent?

According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for ISRG stock average around 4.2% in the next one-month (twenty-one trading days) period after experiencing a 3.4% drop over the previous week (five trading days), implying that the stock will likely rebound in the near term. ISRG stock is also likely to see increased trading activity with its upcoming 3-to-1 stock split on October 6. But how would the returns fare if you are interested in holding ISRG stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Intuitive Surgical stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

If ISRG stock moved by -5% over five trading days, then over the next twenty-one trading days ISRG stock moves an average of 4%, with a good 64% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of Intuitive Surgical Stock Movements:

Question 1: Is the average return for Intuitive Surgical stock higher after a drop?

Answer: Consider two situations,

Case 1: Intuitive Surgical stock drops by -5% or more in a week

Case 2: Intuitive Surgical stock rises by 5% or more in a week

Is the average return for Intuitive Surgical stock higher over the subsequent month after Case 1 or Case 2?

ISRG stock fares better after Case 1, with an average return of 4.4% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 0.5% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Intuitive Surgical stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Intuitive Surgical stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For ISRG stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for Intuitive Surgical after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

It’s pretty powerful to test the trend for yourself for Intuitive Surgical stock by changing the inputs in the charts above.

 

[Updated: Aug 9, 2021] ISRG Stock Rise

The stock price of Intuitive Surgical (NASDAQ:ISRG) has seen a rise of over 8% over the last twenty-one trading days, and it is also up a solid 51% over the last twelve month period. The recent rise can be attributed to the announcement of a 3-to-1 stock split. ISRG stock is now trading at its all-time high of around $1030. The stock appreciation is also backed by solid Q2 results it reported last month. The company’s sales grew a large 72%, driven by a 68% surge in procedure volume, while its earnings of $3.92 per share reflected a massive 3.5x y-o-y growth. While the Q2 2021 figures compare favorably with the prior year quarter, which saw fewer elective surgeries, amid the lockdowns, the company has guided for a solid 27-30% procedure volume growth for the full-year 2021.

But now that ISRG stock has moved to its all-time high levels past $1,000, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a good chance of a rise in ISRG stock over the next month. Out of 468 instances in the last ten years that ISRG stock saw a twenty-one day rise of 8% or more, 291 of them resulted in ISRG stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 291 out of 568, or about 61% chance of a rise in ISRG stock over the coming month. See our analysis on Intuitive Surgical Stock Chances of A Rise for more details.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years data

  • After moving 3.9% or more over a five-day period, the stock rose in the next five days on 51% of the occasions.
  • After moving 5.5% or more over a ten-day period, the stock rose in the next ten days on 51% of the occasions
  • After moving 8.2% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 62% of the occasions.

Predict average return on Intuitive Surgical (ISRG) Stock Return: AI Predicts ISRG Average and Excess Return After a Fall or Rise

Intuitive Surgical (ISRG) Stock Return (Recent) Comparison With Peers

  • Five-Day Return: ISRG highest at 3.9%; BDX lowest at -5.8%
  • Ten-Day Return: ISRG highest at 5.5%; BDX lowest at -4%
  • Twenty-One Days Return: ISRG highest at 8.2%; BDX lowest at -4%

While the historical performance suggests even higher levels are likely for ISRG stock, we continue to believe that it is richly valued. Our Intuitive Surgical Valuation of $953 is based on expected EPS of $13.91 and a 68x P/E multiple, reflecting a discount of around 7% to the current market price of $1030.

Going by historical performance, while ISRG stock may see higher levels, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Pfizer vs Merck.

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