ISRG
The upgrade, in plain English
Intuitive Surgical just got bumped to a cautious buy, which is analyst-speak for: “yes, it’s expensive, but maybe don’t fight the robot.” The stock already trades like a market darling, but the thesis here is that premium pricing is attached to a business with serious staying power.
Why the bull case still has legs
The pitch is pretty simple: Intuitive’s Da Vinci and Ion systems keep building a larger installed base, and that creates the kind of recurring revenue machine investors love. More systems in the wild means more procedures, more consumables, and more service revenue — basically the corporate version of owning a phone company before everyone had smartphones.
And the latest Q1 numbers give the optimism some muscle:
- Revenue grew 23% year over year
- Procedures increased 17%
- Margins expanded, which is a fancy way of saying the business is getting better at turning growth into actual profits
Why Wall Street still cares
That combo matters because it shows operating leverage. In other words, the company isn’t just growing — it’s growing in a way that can scale, which is what helps justify those eye-watering valuation multiples.
So yes, 40x earnings can make your eyebrows jump off your face. But when a company has a quasi-monopoly in robotic surgery, sticky customer relationships, and a compounding installed base, analysts are more willing to squint at the multiple and look at the decade ahead instead.
Big picture: this isn’t a “cheap stock” story. It’s a “the business keeps getting stronger, so maybe the premium is earned” story.