ISRG Stock Trading at its Cheapest in 10 Years: Should You Buy Now?

Intuitive Surgical ISRG is trading at its cheapest valuation in the last 10 years following a decline of more than 40% after touching the $600 level in January this year. Its forward 12-month P/E of 30.26X is well below its 10-year median of 58.18X and high of 93.22X, although it remains above the Medical - Instruments industry’s 25.96X. The compression is notable given that ISRG continues to generate strong growth, but investors are increasingly factoring in moderating U.S. procedure trends, competitive pressure in China, higher costs and uncertainty around hospital capital spending. Its Value Score of D also indicates that the stock is not yet considered inexpensive despite the steep multiple contraction.

The latest quarter illustrates the disconnect between valuation and fundamentals. Second-quarter 2026 revenue increased 19% year over year to $2.89 billion, and adjusted EPS advanced 28%. Total procedures rose 16%, with da Vinci procedures increasing 15% and Ion procedures jumping 36%. Recurring revenue climbed 19% to $2.47 billion and represented 85% of total revenue. Utilization also remained healthy, increasing 3% for da Vinci and 11% for Ion.

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Forward Guidance Points to Durable Growth Despite Moderation

Management maintained its 2026 da Vinci procedure-growth forecast at 13.5-15.5%, expecting results toward the midpoint. General surgery in the United States and procedures outside urology internationally remain the principal growth drivers. Importantly, the outlook continues to reflect several near-term uncertainties, including changes in U.S. patient behavior following ACA premium-subsidy changes, China's tender volumes and competitive intensity, European capital pressures, Japan's recovery and the impact of obesity drugs.

There are encouraging developments beneath this guidance. International da Vinci procedures grew 20% in the second quarter, with Europe and Asia each advancing 20%, while the rest of the world increased 22%. This compares favorably with the first quarter, when international da Vinci procedures grew 19%. Japan also recorded improved system placements following favorable reimbursement decisions.

However, margin expansion is not guaranteed. Intuitive Surgical raised its 2026 adjusted gross-margin outlook to 68-69% from 67.5-68.5%, but continues to face higher freight and semiconductor-memory costs, faster growth of newer platforms and higher depreciation. Thus, the guidance supports continued growth but also indicates that investors should expect elevated spending and some profitability pressure during the platform transition.

Intuitive Surgical, Inc. Gross Margin (TTM)

Intuitive Surgical, Inc. gross-margin-ttm | Intuitive Surgical, Inc. Quote

Product Innovation Expands Long-Term Opportunity

Intuitive Surgical's product pipeline provides a strong counterweight to near-term concerns. The company placed 468 da Vinci systems and 55 Ion systems in second quarter, while more than 1,700 da Vinci 5 systems are now installed. More than 100 planned da Vinci 5 updates are being rolled out, including improvements to telepresence, simulation-based training and care-team workflows.

The single-port platform is gaining traction rapidly, with SP procedures increasing 61% and its global installed base reaching 445 systems. Ion procedures rose 36% to 48,000 and have surpassed 400,000 cumulatively. The company is also progressing with ROSE and EBUS programs and has submitted a next-generation flexible robotic endoscope for FDA clearance.

These innovations strengthen ISRG's competitive position against lower-valued peers such as Medtronic MDT and Stryker SYK. MDT trades at 15.13X forward P/E, while SYK trades at 17.02X, both substantially below ISRG's 30.26X. Yet Medtronic's Hugo remains in an earlier commercialization phase, with management expecting more than 50,000 completed procedures by the end of its fiscal year, while Stryker's Mako has surpassed 2.5 million procedures globally across 47 countries.

Share-Price Movement

ISRG shares have declined 15% over the past three months against the Zacks Medical – Instruments industry's 10% growth. The broader Medical sector has jumped 9.6% during the same period, leaving Intuitive Surgical lagging both its industry and the wider medical sector.

While Medtronic shares have gained 15.1% in the past three months, Stryker declined 10.5%.

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Bottom Line

ISRG's valuation has clearly become more reasonable after the sharp share price decline, but the stock does not yet qualify as an outright bargain given its premium to the industry and D Value Score. The investment case rests on whether sustained procedure growth, da Vinci 5 adoption, higher utilization and expansion of SP and Ion can offset slower U.S. growth, China-related challenges, obesity-drug pressure and elevated costs.

For existing investors, the current risk-reward appears balanced enough to hold the stock rather than exit after the valuation reset. ISRG's current valuation makes the shares considerably cheaper than their historical valuation. However, prospective investors may want evidence of accelerating procedure growth and further margin improvement before committing aggressively. The company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

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This article originally published on Zacks Investment Research (zacks.com).

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