While Intuitive Surgical remains the undisputed leader in surgical robots, its shares took a sharp dive following its latest quarterly earnings. Is Wall Street overreacting?
RBC Capital Markets analyst Shagun Singh seems to think so. According to Singh, a "clean beat" for the second quarter was overshadowed by fears of slowing procedure growth, but investors are missing the bigger picture.
Singh reiterated an Outperform rating on the stock on Thursday with a $575 price target, down slightly from $600.
The bullish call comes after Intuitive Surgical topped both earnings and sales expectations for the second quarter. On the back of this strength, management opted to hold its full-year guidance steady, projecting worldwide da Vinci procedure growth to land near the midpoint of its 13.5% to 15.5% range. Investors likely expected another increase after the company lifted its outlook in the previous quarter.
Concerns over slowing demand are driving the stock lower in premarket trading Friday. Shares sank more than 10% to $360.50, on pace for the largest same-day drop since April 2022 and the lowest close since January 2024, according to Dow Jones Market Data.
Singh conceded that U.S. da Vinci procedure growth moderated to 12% in the quarter, below the 13% growth Wall Street had anticipated and down from 14% growth in the previous quarter. However, "we view the deceleration as transient rather than a structural shift in end-market demand," she said.
Management chalked this up to patients delaying elective surgeries due to rising insurance costs and choosing weight-loss drugs like Ozempic over surgery. However, medically necessary procedures "remain resilient, " Singh continued, "and management emphasized deferred cases will ultimately return."
Outside the U.S., da Vinci procedure growth accelerated to 20% year over year, with broad strength across Europe, Asia, and the rest of the world.
"We believe the procedure narrative will drive a mixed near-term stock reaction," Singh said, "but headwinds are temporary and not reflective of a change in underlying demand or competitive displacement."
Demand remains steady and the company's financial profile is "best-in-class," she added. In short, "we remain buyers."
Intuitive Surgical faces a growing challenge from Johnson & Johnson, as J&J gears up to launch a surgical robot of its own. The system, marketed as Ottova, is designed for soft-tissue procedures in the upper abdomen. J&J is eyeing regulatory clearance by the end of the year.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
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(END) Dow Jones Newswires
July 17, 2026 07:53 ET (11:53 GMT)
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