Up 9% In A Month, Will Intuitive Surgical Stock Continue To See Higher Levels?

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ISRG: Intuitive Surgical logo
ISRG
Intuitive Surgical

The stock price of Intuitive Surgical (NASDAQ: ISRG) has seen a 9% rise in a month, outperforming the broader indices, with the S&P500 down around 2%. Last month the company reported an upbeat Q4, but ISRG stock saw a 10% fall in a week following its earnings release, primarily due to its Q1 outlook. The company expects a significant adverse impact on procedures in Q1 2022, owing to the spread of Omicron.

In our previous update on Intuitive Surgical, we maintained our view that ISRG stock is undervalued, and the dip following its Q4 release can be used as a buying opportunity. ISRG stock has risen 10% since then, and it has still more room for growth, in our view. Omicron is a milder variant of Covid-19, compared to its predecessors. Over the last few weeks, the average number of active cases (7-day average) has plummeted to around 78K currently, compared to its recent peak of 800K cases seen in mid-January. This means that healthcare institutions will have more room to attend to elective procedures, boding well for Intuitive Surgical, and the impact of Omicron may not be as profound on its Q1 and beyond, as anticipated by the company. We estimate Intuitive Surgical Valuation to be around $345 per share, reflecting a 20% upside from its current levels of $288.

But what about the near term? Given that ISRG stock has seen a rise of 9% in a month, will it continue its upward trajectory, or is a fall imminent? Going by its historical performance, there is a higher chance of a rise in ISRG stock over the next month. Out of 350 instances in the last ten years that ISRG stock saw a twenty-one-day increase of 9% or more, 211 of them resulted in ISRG stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 211 out of 350, or about a 60% chance of a rise in ISRG stock over the coming month. See our analysis on Intuitive Surgical Stock Chances of Rise for more details.

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While ISRG stock may see higher levels over the next month, it is helpful to see how its peers stack up. Check out Intuitive Surgical Peers to see how ISRG stock compares against peers on metrics that matter. You can find more useful comparisons on Peer Comparisons.

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

  • After moving -0.9% or more over five days, the stock rose on 58% of the occasions in the next five days.
  • After moving -1.3% or more over ten days, the stock rose in the next ten days on 61% of the occasions
  • After moving 9.2% or more over a twenty-one-day period, the stock rose on 60% of the occasions in the next twenty-one days.

This pattern suggests a higher chance of a rise in ISRG stock over the next five days, ten days, and one month.

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

  • Five-Day Return: MDT highest at 0.2%; BDX lowest at -1.8%
  • Ten-Day Return: SYK highest at 1.0%; BDX lowest at -3.9%
  • Twenty-One Days Return: ISRG highest at 9.2%; MDT lowest at -0.8%

While ISRG stock may see higher levels, the Covid-19 crisis 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 Medtronic vs. IDEXX Laboratories.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

Returns Feb 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ISRG Return 1% -20% 309%
 S&P 500 Return -5% -10% 92%
 Trefis MS Portfolio Return -3% -12% 246%

[1] Month-to-date and year-to-date as of 2/24/2022
[2] Cumulative total returns since the end of 2016

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