President Donald Trump's macroeconomic policies are creating significant uncertainty. His decision to impose sweeping tariffs on goods imported into the U.S. could harm the economy and specific corporations in ways that are scaring off investors. Some companies are already factoring the impact of tariffs on their financial results. One of them is Intuitive Surgical (ISRG 0.17%), a leader in medical devices. Despite the predicted effect of tariffs on the company's financial results for the rest of the year, ...

Core Insights - Robotic-assisted surgery is becoming essential in modern healthcare, with Intuitive Surgical and Stryker leading the market [1][2] - Both companies are heavily investing in innovation and global expansion, making them attractive for investors [2] Market Position and Differentiation - Intuitive Surgical pioneered robotic surgery with the da Vinci platform, while Stryker entered the market through the acquisition of Mako Surgical [3] - Intuitive holds nearly 80% of global surgical robotics volume, contrasting with Stryker's focus on orthopedic robotics with over 1.5 million Mako procedures [4] Revenue & Growth Trends - Intuitive's Q1 2025 revenues increased by 19% to $2.25 billion, with da Vinci procedures growing by 17% [5] - Stryker's MedSurg/Neurotechnology sales rose by 10.6% to $3.89 billion in Q4 2024, while Orthopaedics climbed by 10.8% to $2.55 billion [5] - The global robotic surgery market is projected to grow at a CAGR of 16.5% through 2029, driven by minimally invasive trends and aging populations [6] Estimates Comparison for ISRG & SYK - Zacks Consensus Estimate for ISRG's fiscal 2025 sales and EPS implies a year-over-year improvement of 15.6% and 7.1% respectively [7] - Zacks Consensus Estimate for Stryker's 2025 sales and EPS implies a year-over-year improvement of 8.6% and 10.4% respectively [10] Innovation Driving Growth - Intuitive Surgical is investing in next-generation platforms like the Ion endoluminal system for robotic bronchoscopy [12] - Stryker is enhancing its Mako SmartRobotics suite with AI-driven 3D CT planning and AccuStop haptic feedback [13] Price Performance & Valuation - Year-to-date price performance shows ISRG shares have lost 1.5%, while SYK shares have gained 1.8% [15] - Intuitive Surgical's dominance and sustainable revenue growth position it well, while Stryker's innovations fuel growth in the joint-replacement robotics niche [17] Zacks Rank & Style Score - Both companies currently hold a Zacks Rank 3 (Hold), complicating the investment decision [18] - ISRG's style score of 'F' indicates expensive valuation and low growth potential, while SYK's style score of 'C' suggests strong growth prospects [19]

Core Viewpoint - Intuitive Surgical reported strong quarterly earnings with a double beat on both revenue and earnings per share, but mixed guidance due to tariff uncertainties affecting future growth prospects [3][4][5]. Financial Performance - The company achieved earnings per share (EPS) of $1.81, exceeding estimates by $0.10 and reflecting a 20% year-over-year increase [3]. - Revenue for the quarter was $2.25 billion, surpassing estimates by 3.27% and showing a 19% year-over-year growth [3]. Guidance and Growth Expectations - Intuitive Surgical anticipates a procedure volume growth of 15% to 17%, an increase from the previous guidance of 13% to 16% [4]. - Despite the positive growth outlook, the company faces challenges from tariffs, which could offset this growth [5]. Tariff Impact - The company manufactures 98% of its Da Vinci systems in the U.S., but 70% of endoscopes and 80% of instruments and accessories are sourced from Europe and Mexico, respectively [6]. - Intuitive Surgical expects a non-GAAP gross margin of 65% to 66.5%, a decline of about 5% year-over-year, factoring in an estimated revenue impact of 1.7% due to tariffs [7]. Stock Performance and Analyst Ratings - The current stock price is $508.13, with a 12-month price target of $598.95, indicating a potential upside of 17.87% [8]. - The stock is trading at a forward P/E ratio of 75.8, which is considered expensive compared to the broader market but aligns with its five-year average [8]. - Analysts suggest a cautious approach, recommending waiting for the stock to break above the 50-day simple moving average before taking a long position [10]. Tariff Outlook - The company faces potential tariffs of 125% and 145% for imports and exports to China, 10% for European components, and 25% for certain products from Mexico [12].

Core Insights - Intuitive Surgical (ISRG) reported Q1 earnings for 2025 with mixed results compared to expectations [1] - Revenue for the quarter was $2.3 billion, exceeding analyst expectations by 3% and representing a year-over-year growth of 19% [1] - Earnings per share (EPS) for the quarter surpassed expectations by 5% [1]

Surgical Systems and Regulatory Approvals - As of March 31, 2025, the installed base of da Vinci SP surgical systems is 291, with FDA clearance for multiple procedures[110]. - The da Vinci 5 surgical system has an installed base of 509 as of March 31, 2025, and received FDA clearance for all surgical specialties except cardiac and pediatric[112]. - The company has commercialized various da Vinci surgical systems since 1999, with the latest being the da Vinci 5 surgical system launched in 2024[109]. - The Ion endoluminal system, launched in 2019, has received FDA clearance and various OUS regulatory approvals, expanding the company's offerings into diagnostic procedures[115]. - The company aims to expand the regulatory approvals for the da Vinci SP surgical system in international markets over time[111]. - The company plans to seek additional clearances and approvals for its Ion endoluminal system in OUS markets over time[115]. - The company obtained FDA clearance for the SP SureForm 45 stapler in March 2025, which is useful in thoracic and colorectal surgical procedures[149]. - The company received regulatory clearance for the da Vinci 5 surgical system in March 2024, which is expected to extend over several quarters for a phased launch[153]. - The Japanese Ministry of Health granted reimbursement for five additional da Vinci procedures in April 2024, including lobectomy for benign conditions[155]. - The company anticipates extended timelines for the introduction of new products due to increasingly stringent regulations[148]. - The company has obtained regulatory clearances for various products, including the E-200 generator and redesigned staplers, enhancing its product offerings[153]. Financial Performance and Revenue - Recurring revenue increased to $7.04 billion, representing 84% of total revenue in 2024, up from $5.94 billion (83%) in 2023 and $4.92 billion (79%) in 2022[129]. - Instruments and accessories revenue grew to $5.08 billion in 2024, compared to $4.28 billion in 2023 and $3.52 billion in 2022, reflecting continued procedure adoption[130]. - Service revenue reached $1.31 billion in 2024, an increase from $1.17 billion in 2023 and $1.02 billion in 2022, driven by a 15% growth in the installed base of da Vinci surgical systems[131]. - Systems revenue increased by 17% to $1.97 billion in 2024, following a flat performance of $1.68 billion in 2023[141]. - Total revenue for the three months ended March 31, 2025, increased by 19% to $2.25 billion compared to $1.89 billion for the same period in 2024[184]. - Product revenue rose by 20% to $1.89 billion for the three months ended March 31, 2025, compared to $1.58 billion for the same period in 2024[190]. - Service revenue increased by 16% to $363 million for the three months ended March 31, 2025, compared to $314 million for the same period in 2024[199]. - Operating income for Q1 2025 increased by 23% to $578 million compared to $469 million in Q1 2024[184]. - Net income attributable to Intuitive Surgical, Inc. was $698.4 million for the three months ended March 31, 2025, compared to $544.9 million for the same period in 2024, reflecting a 28% increase[185]. - The U.S. accounted for 68% of total revenue in the three months ended March 31, 2025, up from 66% in the same period in 2024[188]. Installed Base and Procedure Volume - The installed base of da Vinci surgical systems grew to approximately 9,902 as of December 31, 2024, compared to 8,606 in 2023 and 7,544 in 2022, indicating strong market adoption[131]. - The installed base of da Vinci surgical systems reached approximately 10,189 systems as of March 31, 2025, a 15% increase from 8,887 systems in Q1 2024[184]. - In 2024, approximately 2,683,000 surgical procedures were performed with da Vinci surgical systems, a 17% increase from 2023's 2,286,000 procedures[163]. - U.S. da Vinci procedures grew to approximately 1,757,000 in 2024, up 15% from 2023's 1,532,000 procedures, with general surgery being the largest specialty[164]. - OUS da Vinci procedures increased to approximately 926,000 in 2024, a 23% rise from 2023's 754,000 procedures, driven by urology and general surgery[165]. - Approximately 732,000 da Vinci procedures were performed in Q1 2025, a 17% increase from approximately 627,000 procedures in Q1 2024[184]. Tariffs and Trade Impact - The U.S. imposed a 25% tariff on imports from Mexico and Canada on February 1, 2025, but the impact on the company was not material due to USMCA certifications[117]. - A 10% universal tariff on imports not subject to USMCA was announced on April 2, 2025, affecting some raw materials and finished goods[118]. - The U.S. imposed tariffs up to 145% on imports from China on April 7, 2025, which may significantly impact the cost of da Vinci Xi surgical systems in China[119]. Operating Leases and Customer Trends - Total da Vinci system placements under operating lease arrangements increased to 864 in 2024, up from 704 in 2023 and 591 in 2022, with 51% of total placements under operating leases[135]. - Revenue from customer buyouts of leased systems was $109 million in 2024, up from $74 million in 2023 and $72 million in 2022, reflecting customer interest in ownership[140]. - Operating lease revenue was $654 million in 2024, compared to $501 million in 2023 and $377 million in 2022, indicating a growing trend in lease arrangements[135]. - Operating lease revenue was $195 million for the three months ended March 31, 2025, compared to $148 million for the same period in 2024[195]. Research and Development - The company anticipates continued substantial investments in research and development to support product development initiatives[211]. - Research and development expenses rose by 11% to $316.2 million in Q1 2025, compared to $284.5 million in Q1 2024[209]. Financial Reporting and Accounting - The financial statements are prepared in accordance with GAAP, requiring estimates and judgments that affect reported amounts of assets, liabilities, revenues, and expenses[229]. - There have been no new or material changes to the critical accounting estimates since the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[229]. - Actual results may differ from estimates under different assumptions or conditions, highlighting the inherent uncertainty in financial reporting[229].

Core Insights - Intuitive Surgical Inc reported first-quarter 2025 revenue of $2.25 billion, exceeding analyst estimates of $2.19 billion, with a year-over-year increase of 19% [1] - The company placed 367 da Vinci surgical systems in the quarter, up from 313 in the same quarter of the previous year, leading to a total installed base of 10,189 systems, a 15% increase year-over-year [1] - Adjusted earnings for the first quarter were $1.81 per share, surpassing analyst expectations of $1.72 per share [2] Revenue and Growth - Worldwide da Vinci procedures increased by approximately 17% year-over-year, with guidance for a full-year increase of 15%-17% [1][2] - The company expects a gross profit margin of 65% to 66.5% in 2025, accounting for an estimated 1.7% impact from tariffs [3] Analyst Perspectives - Analysts believe the stock deserves a premium multiple due to elevated procedure growth and a new product cycle that could drive significant revenue and EPS growth [4] - Concerns about macro dynamics and potential Medicaid cuts may impact stock performance, but management noted that U.S. capital spending remains stable [4][5] - The company's leasing model is aiding hospitals in managing tight budgets, although potential Medicaid cuts could significantly affect hospital finances [5] Financial Position - The company has a strong cash position of $9.1 billion and zero debt, providing flexibility for share buybacks [6] - Stifel maintains a price target of $670 with a Buy rating, while Truist Securities has adjusted its price target from $605 to $590 but maintains a Buy rating [3][6] Stock Performance - ISRG stock increased by 2.47% to $490.58 [7]

Core Insights - Intuitive Surgical (ISRG) reported strong first-quarter 2025 results, with adjusted earnings per share (EPS) of $1.81, exceeding estimates by 5.9% and showing a year-over-year improvement of 20.7% [1] - Revenue for the quarter reached $2.25 billion, reflecting a 19.2% year-over-year increase and surpassing estimates by 3.3% [2] Revenue Details - The revenue growth was driven by an increase in installed systems and a rise in da Vinci procedure volume [2] - Revenue from the Instruments & Accessories segment was $1.37 billion, up 18% year over year, supported by a 17% increase in da Vinci procedure volume [3] - The Systems segment generated $523 million in revenue, a 25% increase year over year, due to higher system placements and average selling prices [4] - Service revenues amounted to $363 million, reflecting a 15.8% increase from the previous year [5] Margins and Expenses - Adjusted gross profit was $1.5 billion, a 17% year-over-year increase, with a gross margin of 66.4%, down 120 basis points from the prior year [6] - Selling, general, and administrative expenses rose to $563.4 million, up 14.6% year over year, while research and development expenses increased to $316.2 million, up 11.1% [6] Financial Position - The company ended the quarter with cash, cash equivalents, and investments totaling $9.1 billion, an increase from $8.83 billion in the previous quarter [8] - Total assets rose to $19.22 billion from $18.74 billion a year ago [8] Future Outlook - Intuitive Surgical expects gross margin to face a 170 basis points headwind in 2025 due to newly implemented global tariffs, particularly affecting components imported from China [11] - The company has lowered its pro forma gross margin guidance for the year to 65-66.5% from 67-68% [12] - Continued growth in da Vinci procedures and the launch of the da Vinci 5 system are anticipated to drive future revenues, although challenges in certain markets may slow adoption [14][16]

Financial Data and Key Metrics Changes - First quarter revenue was $2.25 billion, a 19% increase year-over-year, with constant currency growth at 20% [45][46] - Pro forma gross margin for Q1 was 66.4%, down from 67.6% in the previous year, primarily due to higher facility costs and a greater mix of lower-margin products [54] - Pro forma net income for Q1 was $662 million, or $1.81 per share, compared to $541 million, or $1.50 per share, in the same quarter last year [58][59] Business Line Data and Key Metrics Changes - Da Vinci procedure growth was 17%, with a 15% increase in the installed base of Da Vinci systems [38][39] - ION procedures grew 58% to approximately 31,000 in the quarter, with 49 ION systems placed [50][51] - SP procedure growth accelerated to 94%, driven by strong growth in the U.S. and international markets [28][52] Market Data and Key Metrics Changes - U.S. procedures grew 13%, with notable strength in benign general surgery, while OUS procedures grew 24%, driven by markets like India and Korea [40][41] - Capital placements included 367 systems, a 17% increase from the previous year, with 204 systems placed in the U.S. [42][43] - The U.S. capital environment remains strong, while OUS markets face constraints due to government budget limitations [72][74] Company Strategy and Development Direction - The company is focused on the full launch of Da Vinci 5 and increasing adoption of its products through training and market access efforts [29][30] - Plans to optimize production costs and adjust supply chain strategies in response to changing trade policies [10][11] - Continued investment in R&D and innovation to drive long-term growth and improve product quality [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term demand for minimally invasive care despite current trade policy uncertainties [11] - The company raised its full-year 2025 procedure growth forecast to a range of 15% to 17% [61] - Management acknowledged potential impacts from tariffs and government budget constraints on capital spending [63][64] Other Important Information - The company opened new manufacturing facilities in California to expand its U.S. manufacturing and R&D footprint [55] - Pro forma operating expenses increased by 12% compared to the previous year, driven by higher headcount and facility-related costs [57] Q&A Session Summary Question: Impact of tariffs on annualized basis - Management indicated that approximately half of the tariff impact is from U.S.-China trade, with the impact expected to increase each quarter [68][69] Question: Capital environment comparison to previous years - Management noted strong customer response to Da Vinci 5 and a relatively strong capital environment in the U.S., while OUS markets face budget constraints [71][72] Question: Inclusion of European reciprocal tariffs in estimates - Management confirmed that the 1.7% estimate includes anticipated European tariffs and emphasized a cautious approach to mitigating tariffs [79][80] Question: Confidence in raising procedure volume forecast - Management cited strong Q1 performance and positive customer feedback as reasons for the early forecast increase [86][87] Question: Drivers of robust OUS growth - Management highlighted strong growth in early-stage markets like India and Taiwan, as well as solid performance in the UK [100][101] Question: After-hours surgery and cardiac surgery growth - Management discussed the importance of after-hours surgery for patient access and the growing interest in cardiac surgery as a viable option for minimally invasive procedures [114][116] Question: Force feedback technology usage and clinical strategy - Management provided insights on the current use of force feedback instruments and the ongoing studies to validate this technology [120][124]

Core Insights - Intuitive Surgical, Inc. reported a revenue of $2.25 billion for the quarter ended March 2025, reflecting a year-over-year increase of 19.2% [1] - The earnings per share (EPS) for the quarter was $1.81, up from $1.50 in the same quarter last year, indicating a positive growth trend [1] - The reported revenue exceeded the Zacks Consensus Estimate of $2.18 billion by 3.27%, and the EPS also surpassed the consensus estimate of $1.71 by 5.85% [1] Financial Performance Metrics - The installed base of the Da Vinci Surgical System reached 10,189, slightly below the four-analyst average estimate of 10,194 [4] - Revenue from products (instruments, accessories, and systems) was $1.89 billion, exceeding the seven-analyst average estimate of $1.55 billion, with a year-over-year growth of 19.9% [4] - Revenue from services amounted to $363 million, surpassing the seven-analyst average estimate of $356.83 million, representing a year-over-year increase of 15.8% [4] - Revenue from systems was reported at $522.70 million, compared to the average estimate of $481.95 million, showing a year-over-year change of 25% [4] - Revenue from instruments and accessories reached $1.37 billion, slightly above the average estimate of $1.33 billion, with an 18% year-over-year increase [4] Stock Performance - Over the past month, shares of Intuitive Surgical have returned -7.9%, compared to a -8.9% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Performance - Intuitive Surgical reported quarterly earnings of $1.81 per share, exceeding the Zacks Consensus Estimate of $1.71 per share, and up from $1.50 per share a year ago, representing an earnings surprise of 5.85% [1] - The company posted revenues of $2.25 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 3.27%, compared to $1.89 billion in the same quarter last year [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.96 on revenues of $2.33 billion, and for the current fiscal year, it is $7.97 on revenues of $9.56 billion [7] - The estimate revisions trend for Intuitive Surgical is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Medical - Instruments industry, to which Intuitive Surgical belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]