Intuitive Surgical's stock tumbled over 10% to $360.50 on Friday, marking its most significant single-day decline since April 2022. This drop comes despite the company beating Wall Street expectations for both earnings and revenue in the second quarter, as the market reacted negatively to slowing growth in da Vinci procedures.
The company's earnings report revealed adjusted earnings per share (EPS) of $2.80, surpassing the $2.50 estimate, with revenue hitting $2.89 billion, exceeding the forecast of $2.82 billion. However, the growth rate for U.S. da Vinci procedures slowed to 12%, falling short of the 13% growth analysts anticipated and a decrease from 14% in the previous quarter.
Management attributed this slowdown to factors like rising insurance costs, which are leading patients to defer elective surgeries, alongside a shift towards weight-loss medications like Ozempic. Nevertheless, they maintained their full-year guidance of 13.5% to 15.5% growth in da Vinci procedures.
Despite the market's reaction, RBC Capital Markets analyst Shagun Singh defended the company's performance, maintaining an Outperform rating with a price target of $575. Singh noted that the slowdown in U.S. procedures might be temporary and highlighted a solid 20% year-over-year growth rate for procedures outside the U.S., driven by strong demand in Europe and Asia.
also the competitive landscape is evolving, with Johnson & Johnson preparing to launch its own surgical robot, the Ottova, targeting regulatory approval by the end of 2026.
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