Intuitive Surgical stock yo-yoed Wednesday despite a "solid" second-quarter report with its newest da Vinci 5 robotic surgery system launch in full swing.
On today's stock market, Intuitive shares closed down 1.8% at 501.95. But in earlier action, Intuitive Surgical stock advanced as much as 3.8%. Both moves followed an after-hours sell-off on Tuesday after the robotic surgery titan hiked its outlook, but still called for a 2025 slowdown in procedure growth.
"There was plenty to like about the quarter," Leerink Partners analyst Mike Kratky said in a report.
Intuitive Surgical earned an adjusted $2.19 per share on $2.44 billion in sales, climbing a respective 23% and 21% year over year. Profit topped analysts' forecast by 14%, while sales beat by 4%. The firm also reported 17% growth in procedures performed using the da Vinci system, in line with estimates.
"We came away encouraged by another strong quarter of commercial execution and believe ISRG has multiple ongoing growth drivers that will help the company maintain its momentum," Kratky said.
He raised his price target on Intuitive Surgical stock to 593 from 587, and reiterated his outperform rating.
Intuitive Surgical Stock: Da Vinci 5 Is Key
Investors are closely watching Intuitive Surgical's da Vinci 5 launch. During the quarter, the company placed 395 systems, up almost 16% year over year. Of those, 180 were da Vinci 5 systems.
"Possibly some investors were looking for a slightly larger beat on total system placements, particularly as OUS (outside U.S.) came in a bit light," Kratky said, referencing Intuitive Surgical's post-release stock slip.
But Intuitive Surgical expects the number of trade-ins to increase over the next few years as hospitals upgrade to the newest system, William Blair analyst Brandon Vazquez said in a report. This should help build up a supply of refurbished Xi systems to sell into more cost-sensitive markets while also fending off lower-cost competition.
On a bearish note, Intuitive Surgical's Ion system placements were down 30% year over year. Ion is the company's lung biopsy robot. But this is normal for the first quarter, Vazquez said.
"Ion is reaching the middle quartile of system adoption, so this might be a more normalized system placement run-rate," he said. "That said, procedure growth of 52% continues to be an important growth driver."
Vazquez kept his outperform rating on Intuitive Surgical stock.
Procedure Growth Slowdown
For the year, the company expects 15.5% to 17% growth in procedures using its da Vinci robotic surgery system. That's actually an increase on the low side from its prior outlook, but still pales compared to the 17% growth in 2024 and 21% in 2023.
Procedure growth is a key metric for Intuitive Surgical. When more procedures are performed using the company's systems, hospitals require more single-use instruments and accessories.
On average, the number of procedures performed each year with the da Vinci system has grown 17% over the past nine years. That includes two outlier years in 2020 and 2021. In 2020, procedures tanked due to the Covid pandemic. The next year, patients caught up on the delayed procedures.
Excluding those years, procedures have averaged almost 18% over seven years.
So, 2025 guidance indicates a flat year, at best, and a slowdown at worst.
Leerink's Kratky noted Intuitive Surgical kept its gross margin guidance despite a 100 basis-point impact from tariffs. The company also reiterated its adjusted operating expenses growth guidance for 10% to 14%, which implies the Street's expectations are in line for the second half of the year.
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