Could the da Vinci 5 system be the breakthrough ISRG stocks need?

While artificial intelligence (AI) and robots are regularly in the spotlight these days, there is one company that has been making surgical robots for over two decades. Intuitive Surgical Inc. NASDAQ:ISRG is the pioneer of robot-assisted surgical systems. Their da Vinci Surgical System enables precision robot-assisted surgical procedures ranging from prostatectomies and hysterectomies to hernia and cardiovascular procedures to lung biopsies.

The medical industry pioneer has been at the forefront of robotics applications for more than two decades and continues to evolve with next-generation versions of its systems. Intuitive Surgical faces competition from Medtronic plc New York Stock Exchange: MDT AND Zimmer Biomet Holdings New York Stock Exchange: ZBH.

Improvement, not replacement, for surgeons

The da Vinci system does not perform surgical operations but increases the surgeon’s capabilities to improve them. Like the bionic-equipped “Six Million Dollar Man” or Iron Man’s armor, the system enhances the doctor’s natural abilities.

The surgeon sits at the console of the da Vinci system. As the surgeon looks into the screen, his or her vision is greatly improved as the system offers crystal-clear, high-definition 3D views magnified 10 times more than what human eyes can see. The surgeon inserts his arms into the sleeves to move tiny instruments like a human hand with a much greater range of motion and precision thanks to built-in tremor filtering technology. This helps the surgeon move each instrument precisely and smoothly without tremors. The system extends the capabilities of what the surgeon can do by improving vision and hands.

FDA approves next-generation da Vinci 5

On March 23, 2024, the U.S. Food and Drug Administration (FDA) granted 510(k) clearance for the da Vinci 5 next-generation multiport surgical robotic system. The surgical controllers feature improved vibration and tremor, making the system the smoothest and most precise to date.

The system integrates Force Feedback technology to measure and transmit to the surgeon the most subtle forces exerted on the tissues. His studies show that the technology allows the force exerted on tissues during surgical procedures to be reduced by up to 43%, resulting in less tissue trauma. Da Vinci 5 has 10,000 more computing power than its predecessor, da Vinci Xi, enabling new systems and digital capabilities. Additional features have been added for customizable console positioning, allowing surgeons to find the best fit for surgical vision and comfort with options designed for pregnant surgeons.

Daily descending triangle

The daily candlestick chart of the ISRG shows a descending triangle pattern. The descending trendline formed its swing high of $403.76 on March 27, 2024, limiting any bounce to a lower high. The flat-bottomed lower trendline formed at $364.17 as shares traded closer to the peak point. The daily relative strength index fell towards the 30 band, sinking with the overall market. The pullback support levels are at $355.17, $332.80, $321.05, and $304.50.

Acceleration of growth

Intuitive Surgical reported first-quarter 2024 EPS of $1.50, beating consensus estimates by 8 cents. Revenue rose 11.5% year over year to $1.89 billion, beating consensus estimates of $1.87 billion. Net income was $547.47 million compared to $360.8 million in the same period a year earlier.

Globally, Da Vinci procedures increased 16% year over year. The installed base of da Vinci surgical systems grew 14% year over year to 8,887 systems after the company installed 313 systems in the quarter. The company did not experience any disruptions due to COVID-19 in the quarter. The company ended the quarter with $7.32 billion in cash and cash equivalents. The company raised its revenue forecast from 14% to 17% in 2024.

CEO Insights

Intuitive Surgical CEO Gary Guthart commented that the core business remained healthy with solid procedure growth and capital investment. Supply constraints for ionic catheters improved in the quarter. Major milestones include the launch of its next-generation multi-port platform, da Vinci 5, and the launch of da Vinci SP in Europe.

Regional performance

Guthart noted that general surgery has driven the performance of procedures in the United States. Regional strength was found in China, Germany and the United Kingdom. The main procedures were colon resection, foregut procedures, and cholecystectomy. Japan has seen moderation in urology growth as it has achieved higher levels of penetration. Doctors’ strikes that began in February in South Korea caused weaker-than-expected growth in the region.

Guthart concluded: “In closing, for 2024, our priorities are as follows. First, we will support the measured launch of da Vinci 5 and our other new platforms by region. Second, we will focus on supporting the focus surgeon adoption Third, we focus on improving margins and quality of our products, and finally, we focus on improving productivity in those functions that benefit from global scale.

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