Key Takeaways
- Intuitive Surgical shares fell 6% today after U.S. da Vinci procedure growth slowed to 10% in the third quarter, even though revenue of $3.05 billion and adjusted EPS of $3.00 beat estimates.
- Intuitive is cutting instrument and accessory revenue per procedure by 3%-5% to win more high-volume benign procedures, and its margins can carry that trade.
- The company narrowed its 2026 da Vinci procedure growth outlook to 14%-15% and took a $450 million antitrust settlement charge.
- The test is whether U.S. procedure growth picks back up in 2027 as the price cuts take hold.
Intuitive Surgical (ISRG) is down 6% today, even though its third-quarter results, released after Tuesday’s close, beat on revenue and earnings.
The problem was the U.S. On the earnings call, Wells Fargo analyst Larry Biegelsen pointed out that 10% growth in U.S. da Vinci procedures was the “lowest we’ve seen since COVID.”
What exactly happened
- Revenue rose 22% to $3.05 billion, and adjusted EPS of $3.00 beat the $2.64 consensus.
- Worldwide da Vinci procedures grew 14%: 10% in the U.S. and 20% everywhere else.
- Intuitive narrowed its 2026 da Vinci procedure growth outlook to 14%-15%, from 13.5%-15.5%, and expects to land closer to the midpoint.
- It took a $450 million antitrust settlement charge, which still needs court approval.
The selloff has already dwarfed that charge. Pricing is the bigger story.
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Intuitive is buying volume
Management said upcoming price actions will cut da Vinci instrument and accessory revenue per procedure by 3%-5% once they’re fully in place. The company says the cuts target high-volume benign procedures where cost holds back adoption.
Instruments and accessories brought in $1.80 billion last quarter, up 18%, so this is a real give. But CFO Jamie Samath made the case plainly: “We believe broader adoption creates more long-term value than near-term revenue per procedure.”
Intuitive can afford the trade. Its gross margin has stayed between 66% and 69% for five years…
…and it just raised its 2026 adjusted gross margin outlook to 68.7%-69.3%, from 68%-69%.
The bet only works if volume grows faster than prices fall. Analysts expect revenue to keep climbing about 12% a year in 2027 and 2028.
I wouldn’t be surprised if those estimates come down a little for the price cuts. But hospitals are still adding robots: Intuitive placed 546 da Vinci systems in the quarter, up from 427 a year earlier. And Samath said the U.S. slowdown matched what the company expected in July, given 16% growth in the same quarter last year.
Priced well below its usual multiple
At Tuesday’s close, Intuitive traded at 37.5x forward earnings, against a five-year average of 54.5x…
…and today’s drop takes it closer to 35x. (Biegelsen kept his Overweight rating and trimmed his price target by just $1, to $486.)
My take: with placements up 28%, this looks like a pause in U.S. growth, and Intuitive’s margins can carry the price cuts. At this multiple, the selloff looks overdone.
Of course, management doesn’t expect the extra volume to show up right away. U.S. procedure growth in 2027 will show whether the bet pays off.
So what is Intuitive Surgical stock actually worth?
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