Is Intuitive Surgical Stock Poised For Growth?

January 23rd, 2026 by Trefis Team
+18.34%
Upside
526
Market
622
Trefis
ISRG: Intuitive Surgical logo
ISRG
Intuitive Surgical

Intuitive Surgical delivered solid Q4 2025 results with adjusted EPS of $2.53, surpassing estimates of $2.26 and up 14.5% from Q4 2024’s $2.21. Revenue hit $2.87 billion, up 19% year-over-year and beating the $2.75 billion consensus, while full-year revenue reached $10.1 billion (+21%) with adjusted EPS of $8.93. Does this performance support pushing the valuation higher despite tempered 2026 guidance?

What’s the valuation story telling us? At current levels around $526, ISRG trades at 59x its trailing adjusted EPS of $8.93, in line with the five-year average of 60x. This consistency raises a key question: can solid procedure momentum, new platform demand, and robust profitability justify pushing the multiple higher?

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How did Q4 operations measure up?

Worldwide da Vinci procedures grew 18%, fueled by U.S. general surgery gains and 23% international expansion. Recurring revenue – 81% of the total at $2.3 billion – rose 20%, highlighting the annuity model’s power. Pro forma operating margins reached 37%, with GAAP income from operations at $864 million. Look at Intuitive Surgical’s financials for more details.

Key Business Drivers

  • Procedure Momentum: Global procedures expanded 18% for the full year, with international markets accelerating to 23% growth. Da Vinci 5 drove adoption in multi-port and single-port procedures, building surgeon preference through superior visualization and ergonomics.
  • Revenue Composition: Systems contributed steadily to installed base growth, while instruments and services dominated profitability. The quarter’s 19% revenue growth reflected pricing discipline and higher utilization across a broader base.
  • Financial Leverage: Annual free cash flow doubled to $2.5 billion from $1.3 billion, funding $2.3 billion in share repurchases at an average $478 price. Pro forma net income hit $914 million in Q4, up from $805 million last year.

2026 Guidance Context

Management forecasts 13%-15% worldwide procedure growth, decelerating from 2025’s 18% due to comparisons and capacity factors. Adjusted EPS guidance of $9.80-$10.00 implies 10%-12% growth. Does this conservatism create a buying opportunity?

Valuation Perspectives

Is 59x poised for expansion?

Historical consistency at 60x feels comfortable, but high-teens growth in procedures, industry-leading margins, and platform upgrades argue for a premium. Why cap the multiple when execution consistently beats expectations?

  • Upside Catalysts: Exceeding 13%-15% guidance through da Vinci 5 ramp, international penetration, and new indications offer clear paths higher. FCF strength supports returns while funding R&D.
  • Potential Headwinds: Growth deceleration to 13%-15% may challenge sentiment, especially if hospital budgets tighten on elective procedures. Supply chain or competitive pressures remain watch items.

The Bottom Line

ISRG’s Q4 beat – 14.5% EPS growth to $2.53, 19% revenue to $2.87 billion, and 18% procedures – reinforces premium fundamentals, supporting multiple expansion potential from 59x despite cautious 2026 guidance. Our $622 price estimate for ISRG stock awaits revision to incorporate these results, likely retaining meaningful upside as execution quality outweighs the slowdown narrative.

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