Intuitive Surgical can continue to grow in the next decade

Intuitive Surgical announced a strong quarter with da Vinci procedures grew approximately 21%. Revenue is up by 17% and GAAP income is up by 86%. For the full year, revenue and GAAP income are up by 12% and 38% respectively. It does seem that the company is gaining momentum and back on their growth track.

A look at the past record shows that revenue is growing at CAGR of 14%, with EPS compounding at 12% over a 5-year period. Similar to many companies, they also do not grow linearly and there will be years when earning will drop.

Data obtained from

What is also pleasing to the eyes is its recurring revenue hits a high of 83% for the latest financial year.

J.P. Morgon Healthcare Conference 2024 Presentation

Beyond the numbers, latest development provides indication that the growth is set to continue in years to come.

  • In January, the Company obtained CE mark certification for the da Vinci single-port (SP) surgical system for use in endoscopic abdominopelvic, thoracoscopic, transoral otolaryngology, transanal colorectal, and breast surgical procedures.
  • During the earning call, they announced that they have submitted to FDA our 510(k) application for their next generation multiport platform, da Vinci 5.

These growth drives should continue to cement the group’s position as the leader for robotic-assisted, minimally invasive surgery.

What not to like?

It’s super expensive! It is trading at a PE of 87 with forward PE at 70! A huge premium for a company that is growing at mid teens. The Non-GAAP forward EPS of 58 is a bit more palatable.

The market has valued it mostly above PE of 60 over the past 5 years. While it might seem that the valuation is rich now, selling it and buying back later at a cheaper price would require very close monitoring and one has to be very decisive about it.

I was right by reducing my stake last July when it was trading at a PE of 96 then! However, I hesitated to buy some back when it went below $300 and now it is trading above my sold price!

With a much smaller position now, I am just going to hold on to my current stake and participate in its long term growth.

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