Intuitive Surgical Inc. (ISRG-Q)

Last year, non-emergency medical procedures finally caught up after Covid and are now at higher than average levels. ISRG makes surgical robots for minimally invasive procedures. It's rallied 52% since October's lows. They recently pre-announced a blow-out quarter.

Their story is about the hardware, but going forward it will be about improving software. It's outperformed healthcare peers. It's a core holding for those who believe in applying tech to healthcare.

Revenue of $1.74B rose 12% year over year, but missed estimates of $1.77B slightly. Instruments and accessories revenue rose 23%, but systems sales fell 11%, Worldwide procedure growth was 19%, vs 20% last year and estimates of 19.4%. Installed base rose 13%. Adjusted EPS was $1.46, vs estimates of $1.41. Intuitive Surgical's results may put the focus on the equipment-leasing impact, but that shouldn't overshadow total placement and procedure volume trends showing increased utilization of its robotic system. The share of robots leased over several years, instead of purchased outright, rose to 52% vs. 37% a year ago. Still, procedure growth was strong year over year, including continued double-digit gains in bariatric surgeries despite patients trying weight-loss drugs. New da Vinci placements were 312 for 3Q, ahead of expectations for 305. The results led Intuitive to raise its 2023 procedure guidance to 21-22% year-over-year growth vs. 20-22% previously and bracketing consensus of 21.5%. We would consider the results good. 
Unlock Premium - Try 5i Free

Has many tailwinds. Likes it. But for healthcare overall, the biotech sector has been awful this year. Doesn't know when this will lift, but biotech is holding back healthcare.

Company has performed very well the past year.
Excellent business model with high cash flow margins.
Long growth runway.
Has recently sold due to high share price valuation (60x P/E ratio).
Better names in sector with cheaper valuation.

Good company, strong growth area. Medical device technology is changing rapidly, and competition will increase, but this company has an edge. He prefers SYK because of its diversification.

He is still waiting to get into a position. You are paying a higher multiple for 20% annualized growth. It is dominant in robotic assisted surgery devices which improve surgery results. It is a $20 billion market which is expected to double in the next few years. Higher growth stocks do get impacted by higher interest rates.

Soared during lockdowns, but got obliterated when the Fed declared war on inflation and names like this got hit. It lost more than half its value and has rebounded partly. Early this year, they pre-announced disappointing number though the company is still growing. Has a good track record over the past 10 years.