By Nate Wolf

Intuitive Surgical stock was falling Monday after the maker of surgical robots received its first Sell rating on Wall Street.

Breaking from consensus, Deutsche Bank Research analyst Imron Zafar downgraded the stock to Sell from Hold and lowered his price target to $440 from $515.

Shares were down 5.9% to $524.12 on Monday after dropping by nearly 10% to start the day.

Intuitive Surgical has enjoyed a virtual monopoly in soft-tissue surgical instruments since the Food and Drug Administration first approved its da Vinci robot system in 2000. But the company likely will face increasing competition from lower-cost remanufactured tools in future years, Zafar argued, cracking Intuitive Surgical's competitive moat.

Privately-held Restore Robotics received FDA approval for a direct threat to da Vinci device earlier this year, overcoming a slew of past legal and regulatory barriers. Deutsche Bank expects more approvals over the coming quarters, and large hospital systems already seem open to adopting remanufactured instruments, which could be available at a 30% to 50% discount.

"While many customers are taking a wait-and-see approach, our strong sense is that adoption by some top sites will likely precipitate adoption at smaller programs," Zafar wrote.

Any adoption of alternative tools could be costly for Intuitive, with the da Vinci system used in more than three million robotic surgeries performed by 50,000-plus surgeons each year. Instruments and accessories account for more than 60% of the company's revenue, and Deutsche Bank projects remanufactured tools taking a 10% to 15% chunk out of these sales in the U.S. by 2028.

Wall Street has largely been bullish on Intuitive Surgical, even as competitors like Medtronic and Johnson & Johnson have moved to create their own robots for soft-tissue surgeries. Before Deutsche Bank's note, five of the six analysts who issued updates on the stock since the beginning of May have reiterated Buy ratings, according to FactSet. Zafar is the only analyst polled by FactSet to give the stock a Sell rating.

Intuitive Surgical's shares have climbed more than 150% over the last three years and more than 26,000% since the stock's 2000 public offering.

Write to Nate Wolf at nate.wolf@barrons.com

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June 09, 2025 12:52 ET (16:52 GMT)

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