By Mackenzie Tatananni

Intuitive Surgical stock tumbled Friday after the company issued conservative guidance for 2025, but analysts remain confident that the medical-technology company will overcome headwinds.

Intuitive Surgical delivered an earnings and sales beat for the quarter ended Dec. 31. Earnings of $2.21 a share and sales of $2.41 billion soundly topped forecasts for earnings of $1.79 a share on sales of $2.25 billion.

The stock dived Friday as investors digested the quarterly results, which were announced after the market close on Thursday. Shares of the surgical robotics company dropped 4.6% to $580.99 on Friday.

The decline is largely due to the company's disappointing full-year guidance. While the outlook was preannounced on Jan. 15, it still delivered a blow to the stock.

Intuitive Surgical said it expects to see 13% to 16% procedure growth in 2025, a notable slowdown from 17% growth in 2024. However, analysts say this is a conservative measure.

Following the earnings report, William Blair analyst Brandon Vazquez reiterated an Outperform rating on Intuitive Surgical, citing its "durable growth potential."

Vazquez highlighted that strong global procedure growth and another solid quarter of da Vinci 5 system placements drove the latest quarter's results.

The company's fifth-generation da Vinci system is its latest surgical robot, which received Food and Drug Administration clearance in 2024 and are slated for broader release in mid-2025.

While increased depreciation and amortization from capital investments and foreign exchange headwinds dented the company's gross margin guidance, Vazquez believes these challenges are "transient."

And he isn't the only bull. Truist analysts pointed to the company's earnings and revenue beats as they reiterated a Buy rating and lifted their price target to $666 from $640 on Friday.

Although the 2025 guidance was a "steeper step-down," the analysts said they remain optimistic, especially in the context of the da Vinci 5 system's rollout.

Raymond James analyst Jayson Bedford maintained an Outperform rating on Thursday while boosting his price target significantly to $688 from $560.

While Intuitive's stock valuation is stretched, the possible upside is clear, the analyst said. Bedford sees "plenty of room for margin expansion" in 2025, even before the da Vinci 5 launch.

Intuitive's 2025 goal of 13% to 16% procedure growth should be "beatable, " Bedford said, noting that analysts lean towards the high end.

In its after-hours earnings call on Thursday, Intuitive Surgical said it had secured an agreement with technology distributors Ab Medica, Abex, Excelencia Robotica, and their affiliates, worth 290 million euros, or roughly $300 million.

Under the terms of the deal, which is expected to close in early 2026, Intuitive Surgical will establish a direct presence in Italy, Spain, Portugal, Malta, and San Marino.

The transaction should be "slightly accretive" to pro forma earnings per share, the company said.

However, Intuitive Surgical noted a "consistently challenging market" in China, the United Kingdom, and Germany.

Management also acknowledged that President Donald Trump's proposed tariffs on imports from Canada, Mexico, and China could have a material impact on its business.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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January 24, 2025 13:18 ET (18:18 GMT)

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