Shares of robotic surgery specialist Intuitive Surgical Inc. (Nasdaq: ISRG) have jumped over 600 percent over the past decade. The stock was worth $733.87 at closing on November 6, while adding 10.05 percent in the past week. Year to date company’s stock price has increased by 24.14 percent which reaches nearly 33 percent over the past year.
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Such a performance pushes investors to think about whether the stock’s current price is on the higher side and also does the stock has the potential to grow further especially in a year or two.
The major advantage of Intuitive Surgical is its market share. Today, da Vinci robotic surgical systems from the company are leading the market with no significant competitors so far. Also, sales of robots by Intuitive Surgical to hospitals in the United States and abroad are constantly increasing.
In addition, the list of procedures that can be done using its robot is regularly expanded by Intuitive Surgical. Just last year, the list of processes was increased to seven more after the FDA approved it. In doing so, a lung biopsy was among the new procedures. Da Vinci devices were 18 percent more often used in 2019 than in 2018. About 1.2 million procedures were performed in total.
Intuitive Surgical generates more than 70 percent of its revenue from regular maintenance and sales of disposable instruments and surgical supplies. This means that the permanent revenue base of the company will increase with each newly installed da Vinci. Last year, the company’s revenue from instruments and accessories grew 23 percent year-on-year. Moreover, revenue from maintenance also increased by 14 percent during that period.
Intuitive Surgical has an international reach, and in various countries have a high percentage of the older population and strong demand for da Vinci surgical procedures, the company’s robots may be available.
However, despite having significant benefits, the stock of Intuitive Surgical is also prone to some risks also which might hinder investors to invest in the stock while making their investment decision.
The expansion of rivals is one of the risks. Through Intuitive Surgical is still the market leader with a substantial advantage other manufacturers, such as Medtronic plc (MDT) and TransEnterix Inc. (TRXC) are gradually emerging that are ready to offer their solutions in the field of robotic surgery.
Recently, there have also been comments from doctors who do not consider the da Vinci robot a better solution than traditional surgery in all of the cases.