Over the past 12 months, Intuitive Surgical, Inc. (ISRG) has faced numerous challenges, with its stock price declining 26% cumulatively. However, some Wall Street analysts remain optimistic about the stock, and the target prices set by multiple analysts suggest considerable upside from current levels. David Roman, an analyst at Goldman Sachs (GS), is among them. He recently maintained a “Buy” rating on the stock and set a 12-month target price of $558, which is 47% above Intuitive Surgical’s current share price.
The recent headwinds facing Intuitive Surgical include lower-than-expected profit margins related to the “Da Vinci 5,” the latest version of the da Vinci surgical robot system launched in 2024. The system has seen strong market acceptance, but its profit margins are lower than those of its predecessor. In addition, this medical device specialist is also grappling with rising costs stemming from high tariffs. It remains unclear whether the company can resolve these challenges within the next 6 to 12 months.
Nevertheless, there are solid reasons to be optimistic about Intuitive Surgical’s long-term prospects. Take the Da Vinci 5, for example. This new product offers multiple advantages over its predecessor, among which force feedback technology allows surgeons to perceive tissue pressure and texture through the robotic manipulator, providing better tactile sensation and helping to make delicate surgeries safer, more precise, and easier to perform. With these enhanced features, the Da Vinci 5 is expected to attract surgeons or hospitals that were previously hesitant to use the da Vinci system, thereby helping the company expand its market and potentially gain indications that previous generations could not obtain. This would lead to a larger installed base, as well as stronger and more profitable recurring revenue from instruments and accessories.
Intuitive Surgical still has a substantial addressable market in the robotic-assisted surgery (RAS) industry. Robotic-assisted surgery enables surgeons to perform minimally invasive procedures that offer significant advantages over open surgery, yet market penetration remains insufficient, and with the global population aging, the market is expected to grow further.
Looking back at Intuitive Surgical’s performance since its IPO, the stock has already experienced eight pullbacks of 30% or more. Therefore, the current decline is not unusual for this growth stock. In fact, the medical device manufacturer’s recent performance has been fairly solid. In the fourth quarter of 2025, its installed base of surgical robots grew 12% year-over-year. In the first quarter of 2026, the installed base also grew 12% year-over-year, with no drastic directional change.
However, the real key is not the number of newly sold da Vinci surgical systems. Robot sales account for only about 25% of the company’s revenue, with the rest coming from service, instrument, and accessory sales. These are annuity-like revenue streams that continue to generate income as long as da Vinci robots are in use. This is a compelling growth story—each additional da Vinci robot added builds a stronger revenue stream through parts and service sales.
The most prominent issue with Intuitive Surgical’s stock is actually investor expectations. Even after the significant pullback, the stock still trades at a price-to-earnings ratio of 50 times. But surprisingly, this figure is well below the five-year average of 69 times. Over the past five years, its P/E ratio has reached as high as 84 times. Investors have historically tended to price in a great deal of positive news. At such a high P/E multiple, even a slight shift in investor sentiment can trigger a substantial stock pullback. However, after every previous major pullback, the stock eventually went on to make higher highs. This does not mean the pattern will repeat this time, but it does suggest that growth investors who have been waiting on the sidelines should take a fresh look at this stock, which may warrant attention.
When Intuitive Surgical reports its second-quarter earnings, investors should pay close attention to the number of da Vinci systems installed, as well as the volume of surgeries performed using the da Vinci system.
