ISRG Stock Price Falls to 200-DMA: Should You Buy, Hold or Sell?

Shares of Intuitive Surgical ISRG have declined 16.5% in the past month, with the price currently trading around its 200-day moving average (200-DMA). The price corrected after touching its all-time high of $616 in January, followed by a retest of the psychological level of $600 in February.

ISRG stock has been on an uptrend since October 2022. Share prices more than tripled during this trend before the recent fall. The stock has been returning nearly 270% since the beginning of the trend. This surge in ISRG's share price is fueled by strong demand for its robotic surgery procedures, especially the da Vinci platform. However, this strong demand bolstered ISRG’s valuation, stretching it to far from the industry mean. Although the stock has declined significantly in the past month, shares are still trading at a significant premium to the industry’s valuation, raising concerns.

So far this year, ISRG’s shares have lost 4.7% compared with the Zacks Medical - Instruments industry’s decline of 3.8% and the broader Zacks Medical sector’s gain of 3.9%. The S&P 500 Index has decreased 2.7% in the same period.

YTD ISRG Stock Price Performance

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Intuitive Surgical continues to redefine the robotic-assisted surgery landscape with strong revenue and procedural growth. As the company moves into 2025, the strategic focus will be on expanding its footprint through cutting-edge technology, targeted international expansion and robust manufacturing capabilities. However, macro-economic challenges remain, with the looming risk of tariff wars across the globe with the United States stepping up the game following Trump’s election to the President’s office earlier this year.

ISRG 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%. The company 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.

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Rising ISRG Procedure Volume and Market Expansion

ISRG’s Da Vinci procedure volume increased 17% in 2024, with continued growth expected in 2025. The company is positioning itself for sustained expansion through innovation and international market penetration. The U.S. market will continue to drive growth in general surgery procedures, particularly in cholecystectomy, foregut and appendectomy procedures. However, bariatric procedures may see headwinds due to the increasing adoption of GLP-1 weight loss medications.

International markets, including India, the U.K., Italy and Japan, showed robust 25% year-over-year growth, supported by recent investments and approvals. System utilization trends also indicate increasing adoption, with multiport systems rising 3%. The Da Vinci SP and Ion platforms saw 12% and 13% growth, respectively.

The Da Vinci 5 system, with 362 placements in 2024, is set for a broad commercial launch in mid-2025. ISRG is set to introduce hardware and software upgrades to further enhance the system’s capabilities. New force feedback technology promises a 55% reduction in maximum exerted force during suturing, positioning ISRG at the forefront of precision surgery.

Meanwhile, the Ion robotic platform saw a 78% surge in procedures, with international expansion gaining momentum, particularly in Europe, Korea and China. AI-driven lung models and high-precision capabilities will continue to enhance Ion’s global adoption.

The Da Vinci SP system also experienced accelerated growth, with an 81% year-over-year increase, driven by strong demand in Korea, Japan and Europe. New regulatory approvals in the United States for thoracic and colorectal procedures could further drive adoption in 2025.

Uptrend in ISRG Stock: Trades Near 200-Day Average

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ISRG Strategic Investments and Market Penetration

To fuel further expansion, ISRG has planned to directly market its da Vinci products 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.

ISRG Estimates Movement Over 60 Days

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ISRG Competitive Challenges and Market Headwinds

Currently, ISRG is facing a rising risk of imposition of tariffs by the United States and reciprocation from other countries. The company faces potential financial headwinds from new tariffs, particularly given its reliance on manufacturing in Mexico. Tariffs could increase production costs, squeezing margins and potentially leading to higher prices for hospitals. Moreover, there can be a supply snag as well that may hurt the top line. While ISRG has strong pricing power, cost increases could slow the adoption of its da Vinci systems and adversely impact its competitive position, especially amid rising competition. The company is evaluating responses, including supply chain adjustments or price increases. If tariffs are significant, they could weigh on ISRG’s profitability and long-term growth, making cost control and strategic flexibility critical for sustaining its 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 and Medtronic MDT, 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.

Meanwhile, ISRG is facing capital constraints in Europe and pressures in the U.S. bariatric segment that may affect its procedure growth. Economic pressures in key European markets, such as Germany and the U.K., are slowing system placements, limiting ISRG’s growth. Meanwhile, the rise of GLP-1 weight-loss drugs has led to a decline in bariatric surgeries, hurting procedure volumes in the United States. While ISRG’s recurring revenue model helps mitigate risks, these headwinds could affect near-term growth. A rise in tariffs may further increase these challenges.

To address these challenges, ISRG is working on expanding its regulatory reach and emphasizing the unique value propositions of its product portfolio. However, retaining its dominant position may call for continued innovation, cost management and an ability to navigate complex international regulatory environments.

Rising geopolitical tension, along with war raging in Middle Eastern countries and the continued Russia-Ukraine war, is leading to uncertainty. Apart from these, China and India are having border disputes. Moreover, the fall of the government in Bangladesh is raising chaos in the Indo-Pacific region. Any escalation of these situations can hurt economic progress globally, affecting ISRG’s top and bottom-line performance.

ISRG P/E Ratio (Forward 12 Months) Higher Than Industry

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Wrapping Up: How to Play ISRG Stock

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. This level will act as a decisive area, and a confirmed breach of this level will take the stock down further. We also 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.

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, impacted by 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). Moreover, the Style Scores don’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 towards the five-year mean, it still looks expensive. Moreover, the Momentum score of ‘A’ implies the continuation of the following trend.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

As such, we believe that investors may hold the stock for now but we caution against any new position. However, shares have bounced back significantly after falling to the 200-DMA previously. With strong fundamentals, a reversal from the current level may happen, but investors should wait for a better entry point.

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This article originally published on Zacks Investment Research (zacks.com).

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