Intuitive Surgical 4Q25: Squeaky Clean Quarter; Top Pick (PT $750)
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Bernstein maintains an Outperform rating on Intuitive Surgical, raising the target price from $740 to $750 following a strong fourth quarter. Adjusted EPS reached $2.53, beating consensus by 12% despite a $70 million donation to the Intuitive Foundation that impacted EPS by roughly $0.15. Gross margin came in at 67.8% and operating margin at 37.3%, beating expectations by 90 and 160 basis points respectively.
The 2026 gross margin guidance of 67% to 68% includes an estimated 1.2% tariff impact, while operating expenses are projected to grow 11% to 15%. The company recently obtained FDA approval for multiple cardiac procedures on the dv5 platform, unlocking access to roughly 160,000 annual cases with a massive total addressable market. The XiR refurbished system also presents a significant opportunity in ambulatory surgery centers, with 42 installations in 2025.
Management guided for 13% to 15% global procedure growth in 2026, which Bernstein views as a conservative starting point. Global da Vinci procedure volume grew 17% in 2025, driven by strong system utilization. Although competition in China is intensifying, localized Xi production should help maintain pricing competitiveness.
Bernstein projects 2026 EPS of $10.11 and 2027 EPS of $11.72. The new $750 target is based on 64 times forward earnings, underpinned by five transformative product cycles including dV5, AI, Ion, XiR, and SP.