After a strong rally in 2024, shares of Intuitive Surgical (ISRG Quick QuoteISRG - Free Report) have seemed to lose momentum since February. The stock has declined 6.1% in the past three months, primarily due to growing tension on tariffs. It has fallen more than 20% from its all-time high of $616 in January.

ISRG has been on a strong upward trajectory since October 2022, with shares more than tripling during the rally before a recent pullback. Since the beginning of this trend, the stock has delivered a return of nearly 270%. This impressive surge has been driven by robust demand for the company’s robotic surgery systems, particularly the da Vinci platform. However, the heightened demand has also pushed ISRG’s valuation well above the industry average. Despite the recent decline since February, the stock continues to trade at a substantial premium to its peers, raising valuation concerns.

Intuitive Surgical remains at the forefront of robotic-assisted surgery, driven by solid revenue performance and continued procedural growth. As the company heads into 2025, its strategic priorities include advancing its technology, expanding internationally and scaling up manufacturing operations. However, global macroeconomic uncertainties persist, most notably the growing risk of trade conflicts, as the United States adopts a more protectionist stance under President Trump following his return to office earlier this year.

Financial Performance and Revenue Growth

ISRG reported fourth-quarter 2024 revenues of $2.41 billion, marking a 25.2% year-over-year increase. Full-year revenues of $8.4 billion represent 17% year-over-year growth, underlining the company’s ability to generate consistent, recurring revenues — now 84% of total earnings. ISRG recorded strong earnings per share (EPS) growth of 2% (to $2.21) and a pro forma operating margin of 38%. It anticipates a declining operating margin for 2025 due to increased depreciation expenses and a higher mix of lower-margin products like da Vinci 5, Ion and SP.

So far this year, ISRG’s shares have lost 6.1% compared with the Zacks Medical - Instruments industry’s decline of 12.5%. The broader Zacks Medical sector has gained 5.3% and the S&P 500 Index has decreased 9.2% in the same period.

YTD Price Performance

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Rising Procedure Volume and Market Expansion

ISRG’s da Vinci procedure volume rose 17% in 2024, with continued momentum expected in 2025. The company is positioning itself for long-term growth through ongoing innovation and deeper penetration into international markets. In the United States, general surgery remains a key driver, particularly in cholecystectomy, foregut and appendectomy procedures. However, bariatric surgery may face challenges due to the rising adoption of GLP-1 weight-loss medications.

International markets — including India, the U.K., Italy and Japan — delivered robust 25% year-over-year growth, supported by recent regulatory approvals and strategic investments. System utilization also continues to trend positively, with multiport system use increasing 3%. The da Vinci SP and Ion platforms posted strong growth of 12% and 13%, respectively.

The da Vinci 5 system saw 362 placements in 2024 and is set for broad commercial launch in mid-2025. Upcoming hardware and software upgrades aim to further elevate its capabilities, including new force feedback technology that reduces maximum exerted force during suturing by 55%, reinforcing ISRG’s leadership in precision surgery.

Meanwhile, the Ion robotic platform experienced a 78% surge in procedure volumes, with international expansion accelerating, particularly in Europe, Korea and China. Advanced AI-powered lung modeling and enhanced precision tools are expected to support broader global adoption.

The da Vinci SP platform also saw significant growth, with an 81% year-over-year increase due to strong demand in Korea, Japan and Europe. In the United States, newly approved indications for thoracic and colorectal procedures are expected to further boost adoption in 2025.

The recent FDA clearance for ISRG’s SureForm 45 stapler, specifically designed for use with single-port (SP) robotic surgical systems, should drive accessories sales in the upcoming quarters. The SureForm 45 stapler expands the capabilities of minimally invasive procedures in narrow surgical spaces, enabling greater precision and access for surgeons.

ISRG Stock Trades Near 200-Day Average

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To fuel further expansion, ISRG has planned to market its da Vinci products directly in Italy, Spain, and Portugal at a cost of EUR 290 million, deepening its customer relationships. Manufacturing expansion continues with new facilities in California, Germany and Bulgaria, ensuring scalable production for Da Vinci 5 and Ion systems. Additionally, digital tools, such as the My Intuitive app and VR simulators, should improve surgeon training and optimize procedural outcomes.

Competitive Challenges and Market Headwinds

ISRG is currently facing growing risks from potential U.S.-imposed tariffs and retaliatory measures from other countries. These new trade barriers could create financial headwinds by driving up production costs, squeezing margins and possibly leading to higher prices for hospitals. Additionally, supply-chain disruptions may emerge, posing a threat to revenue growth.

While ISRG benefits from strong pricing power, rising costs could slow the adoption of its da Vinci systems and weaken its competitive edge, especially as market competition intensifies. The company is actively evaluating strategic responses, including supply-chain realignments and selective price adjustments. However, if tariffs are substantial, they could pressure profitability and hinder long-term growth, making cost management and operational agility essential to maintaining financial momentum.

Additionally, ISRG faces growing competition in the robotic-assisted surgery space, making cost efficiency crucial. The competition is coming from bigger players, including Johnson & Johnson (JNJ Quick QuoteJNJ - Free Report) and Medtronic (MDT Quick QuoteMDT - Free Report) , both investing heavily in robotic surgery. Chinese manufacturers are also offering competitive alternatives, intensifying pricing pressures in the region. Capital constraints in Europe and delays in Japan could slow hospital adoption of ISRG’s robotic platforms.

Moreover, geopolitical risks, including tensions in China, the Russia-Ukraine conflict and Indo-Pacific instability, may pose headwinds to global expansion. Intuitive Surgical also faces increasing competition from international robotic surgery companies, particularly in China, where local firms are introducing competitive systems.

ISRG is currently navigating several headwinds that could affect its procedure growth. In Europe, capital constraints — particularly in markets like Germany and the U.K. — are slowing system placements and limiting expansion opportunities. In the United States, the growing adoption of GLP-1 weight-loss drugs is reducing the demand for bariatric surgeries, leading to softer procedure volumes in that segment. While ISRG’s recurring revenue model provides some resilience, these challenges may weigh on near-term growth. Potential tariff increases could add further pressure.

To mitigate these risks, ISRG is focusing on expanding its regulatory footprint and highlighting the differentiated value of its product portfolio. However, sustainment of its leadership will call for ongoing innovation, disciplined cost control and the ability to navigate increasingly complex global regulatory landscapes.

Geopolitical instability is also contributing to uncertainty. Ongoing conflicts in the Middle East and the prolonged Russia-Ukraine war, along with rising tensions between China and India and political turmoil in Bangladesh, are adding to regional and global volatility. Any escalation in these situations could disrupt economic activity and negatively impact ISRG’s financial performance.

ISRG’s P/E F12M Higher Than Industry

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Wrapping Up

The share price of ISRG reversed after taking resistance around the $600 level. Currently, the shares are trading near a strong support zone of 200-DMA. We advise investors to remain cautious as higher-high and higher-low are characteristics that define an uptrend. However, ISRG stock fell after making a lower high and breached the previous low, implying a reversal of the trend. The stock’s pricey valuation also implies a potential correction. The company is trading significantly higher than the industry. However, it is currently trading below its five-year median, which can act as a cushion against further decline.

Looking forward, ISRG projects 13-16% procedural growth in 2025, balancing expansion opportunities with market challenges. Additionally, gross profit margins are expected to moderate to 67-68% in 2025 due to increased depreciation expenses from new facility investments, a shift toward lower-margin products, such as the Da Vinci 5, Ion and SP systems, and stronger U.S. dollar effects on international revenue streams.

ISRG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moreover, the Style Scoresdon’t look quite promising. The company has a Value Score of D and a Growth Score of C. The valuation chart also shows the significant premium for ISRG stock compared with the industry. Although the valuation has declined from its 5-year high and has started moving toward the five-year mean, it still looks expensive. Moreover, the Momentum score of ‘F’ implies that the stock may trade within the range in the upcoming few months.

As such, we believe that investors may hold the stock for now. Nevertheless, we caution against taking a new position. With strong fundamentals, a reversal from the current level may occur, but investors should wait for an attractive entry point.