We came across a bullish thesis on Intuitive Surgical, Inc. (ISRG) on Business Model Mastery’s Substack by The Antifragile Investor. In this article, we will summarize the bulls’ thesis on ISRG. Intuitive Surgical, Inc. (ISRG)’s share was trading at $538.88 as of Jan 14th. ISRG’s trailing and forward P/E were 86.64 and 69.44 respectively according to Yahoo Finance.
A medical technician using surgical robotics to perform minimally-invasive urologic surgery in an operating room.
Intuitive Surgical (ISRG) stands as a leader in the field of robotic surgery, primarily due to its pioneering da Vinci Surgical System, which has become synonymous with the sector. By 2023, over 7,500 da Vinci systems were installed worldwide, commanding an impressive 70% market share in robotic-assisted surgeries. The company’s dominance is rooted in its technological leadership, reinforced by a portfolio of over 2,600 patents, which serve as a protective barrier, making it extremely difficult for competitors to replicate its innovations. This substantial intellectual property advantage positions Intuitive Surgical far ahead of competitors like Stryker’s Mako and Zimmer Biomet’s Rosa, ensuring its continued dominance in robotic surgery.
A key factor that makes Intuitive Surgical nearly untouchable is the high switching costs faced by hospitals that have already invested heavily in the company’s ecosystem. With significant capital invested in acquiring da Vinci systems and training more than 70,000 surgeons globally, the economic and operational barriers to switching to a competitor’s platform are formidable. This entrenched customer base ensures a long-term, stable revenue stream for the company.
Moreover, Intuitive Surgical’s business model is centered around recurring revenue, with services and accessories accounting for 78% of its total $6.9 billion revenue. This mix provides the company with stable and predictable income, which buffers it against economic downturns and market fluctuations. Despite emerging competition, Intuitive Surgical’s head start in the robotics space, combined with its formidable intellectual property and loyal customer base, ensures that it remains the undisputed leader in robotic surgery, continuing to innovate and expand its market reach.
Intuitive Surgical, Inc. (ISRG) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 82 hedge fund portfolios held ISRG at the end of the third quarter which was 67 in the previous quarter. While we acknowledge the risk and potential of ISRG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ISRG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.