ISRG Stock Study (5-29-26)

I recently did a stock study on Intuitive Surgical Inc. (ISRG, $423.63).

M* writes:

     > Intuitive develops, produces, and markets a robotic system for
     > assisting minimally invasive surgery. It also provides the
     > instrumentation, disposable accessories, and warranty services
     > for the system. The company has placed more than 10,000 da Vinci
     > systems in hospitals worldwide, with more than 6,000 installations
     > in the US and a growing number in emerging markets.

Over the past decade, this large-size company grows sales and EPS at annualized rates of 15.1%. Lines are mostly up, straight, and parallel except for sales+EPS decline in ’20, an additional EPS dip in ’17, and an additional EPS decline in ’22. Five- (10-) year EPS R^2 is 0.74 (0.87) and Value Line (VL) gives an Earnings Predictability score of 70. Shares outstanding increase 2.5% (0.3%/year).

Over the past decade, PTPM leads peer and industry averages despite falling from 36.3% to 32.9% (’25) with a last-5-year mean of 30.3%. ROE leads peer and industry averages while ranging from 11.1% in ’22 to 17.3% in ’18 with a last-5-year mean of 14.2% (shareholder equity consistently positive with 13.3% CAGR). Debt-to-Capital is zero throughout.

Quick ratio is 3.3 and interest coverage N/A (no long-term debt) per M* who assigns “Wide” Economic Moat, “Exemplary” rating for Capital Allocation, and an A grade for Financial Health (per BetterInvesting® website). VL gives an A+ grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 16.3% and 13.3% for ’26 and ’27, respectively (based on 30 analysts).
• Zacks gives YOY ACE 16.5% and 12.4% for ’26 and ’27 (13 analysts).
• VL projects 11.2% per year from ’25-’30.
• CFRA projects 13.1% YOY and 12.0% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 14.6% per year and projects 5-year CAGR (ending 2029) of 11.1% in Equity Report.

My 11.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 14.8% and 15.3% per year for ’25-’27 and ’25-’28, respectively (based on 38 analysts).
• Nasdaq.com gives ACE 14.5% YOY and 10.5% per year for ’27 and ’26-’28 [12 / 12 / 1 analyst(s) for ’26 / ’27 / ’28].
• Seeking Alpha projects 4-year CAGR of 15.5%.
• Argus projects 5-year CAGR of 13.0%.
• Finviz gives 5-year annualized ACE of 14.2% (7).
• LSEG projects LTG at 15.9%.
• YF gives YOY ACE 16.6% and 13.2% for ’26 and ’27, respectively (27).
• Zacks gives YOY ACE 16.5% and 12.6% for ’26 and ’27 (13) along with 5-year CAGR of 14.6%.
• VL projects 10.5% per year from ’25-’30.
• CFRA projects 13.0% YOY and 11.9% per year for ’26 and ’25-’27 along with 3-year CAGR of 13.0%.
• M* gives ACE CAGR 18.4% and projects 5-year CAGR of 15.5% (lower of GAAP and adjusted) in Equity Report.

My 10.0% forecast is below the long-term-estimate range (mean of eight: 14.7%). Initial value is ’25 EPS of $7.87/share rather than 2026 Q1 EPS of $8.25 (TTM).

My Forecast High P/E is 52.0. Over the past 10 years, high P/E increases from 38.8 to 78.3 (’25) with a last-5-year mean of 82.9 and last-5-year-mean average P/E of 66.1. I am near bottom of the range (only 38.8 is less).

My Forecast Low P/E is 41.0. Over the past 10 years, low P/E increases from 26.8 to 54.0 (’25) with a last-5-year mean of 49.3. I am forecasting lowest since 2020 (40.9).

My Low Stock Price Forecast (LSPF) of $322.70 is default based on initial value from above: 23.8% less than previous close and 22.1% less than the 52-week low.

These inputs land ISRG in the HOLD zone with a U/D ratio of 2.5. Total Annualized Return (TAR) is 9.5%.

PAR (using Forecast Average—not High—P/E) of 7.1% is less than I seek for a large-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 207 studies done in the past 90 days (my study and 43 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 13.6%, 15.0%, 65.8, and 47.3, respectively. I am lower across the board. VL projects a future average P/E of 45.0 that is less than MS (56.6) and less than mine (46.5).

MS high / low EPS are $16.32 / $7.89 versus my $12.67 / $7.87 (per share). My high EPS is less due to a lower growth rate. VL high EPS of $14.70 is in the middle.

MS LSPF of $367.60 implies a Forecast Low P/E of 46.6: less than the above-stated 47.3. MS LSPF is 1.5% less than the default $7.89/share * 47.3 = $373.20 resulting in more conservative zoning. MS LSPF still exceeds mine by 13.9%.

MOS is robust in the study because my inputs are near or less than historical/analyst/MS averages/ranges. In support of the MOS, MS TAR exceeds mine by 9.2% per year (too much, actually) and my LSPF is significantly less (with stock trading just above the 52-week low, I could make the case to raise it a bit).

With regard to valuation, PEG is 2.8 and 4.6 per Zacks and my projected P/E: both overvalued (M* has 2.5). Relative Value [(current P/E) / 5-year-mean average P/E] is low at 0.77. “Quick and Dirty” DCF method has stock undervalued by 29% while M* reports the stock at a 12% premium.

Per U/D, ISRG is a BUY under $406/share. BetterInvesting® TAR criterion is met [658.8 / ((14.87 / 100 ) +1 ) ^ 5] ~ $329 given a forecast high price ~$659 (no dividend).

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