QS Research · Michael Burry's Scion Capital analyst template · 2006
INTUITIVE SURGICAL INC (ISRG)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -32% · downside -48% · upside +20%
TTM to Sep 30 2026, ISRG earns $3.88B EBITDA and $3.60B FCF, but at $451.82 the EV is $152.58B, or 39.3x EBITDA versus peer medtech at 12.0x-26.4x. Even at the highest peer multiple of 26.4x, TTM EBITDA supports about $306.9/share (-32.0%); at SYK's 19.8x it supports about $233.3/share (-48.4%), so the current price already assumes sustained 20%+ growth. The upside case requires EBITDA to grow 20.5% and the 39.3x multiple to hold, which yields only about $541.7/share (+19.9%). No normalized average is used; all cases use the same TTM EBITDA base as section 13. The market is not missing the growth story, it is overpaying for it, so the rule gives a short, though the franchise quality and buyback keep conviction at medium rather than high.
Key numbers
- Share price: $451.82
- Market cap: $156.62B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $11.58B
- EV / EBITDA (TTM): 39.3x
- P/E (TTM): 53.0x
- Price / book: 9.80x
The 15 boxes
- ✓ 1. Long-form business notes
ISRG makes money by selling da Vinci and Ion systems as capital equipment, then supplying instruments and accessories, services, learning and digital subscriptions tied to system use; FY2025 revenue was $10.06B with $2.95B operating income and $3.03B operating cash flow. Between the FY2020 10-K and the FY2025 10-K, the portfolio shifted to include the fifth-generation da Vinci 5 while retaining X/Xi/SP/Si, and the stated strategy moved from a quadruple aim to a Quintuple Aim with more digital subscription and learning content. The sources describe product categories and channels but do not break out segment revenue.
- ✓ 2. Competitive advantage
Intuitive looks like a scale-and-IP moat story rather than a cost story: revenue ran from $4.36B (FY2020) to $10.06B (FY2025) with operating income rising $1.05B → $2.95B, and FY2025 profit ($2.86B net) sits below pre-tax income of $3.31B, i.e. it is operating, not a one-off. The moat rests on >5,600 granted patents (12/31/2025), an integrated ecosystem of systems, instruments, learning and support, and consumable instruments whose chips stop reuse past a set procedure count. Against that, the 10-K names ~14 robotic rivals plus J&J and Medtronic, and explicitly warns of pricing pressure and rising China competition, so the advantage is durable but not unassailable.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 9/30/26) showed revenue +22% to $3.05B, da Vinci procedures +14% to ~906,000, Ion procedures +31% to ~49,700, and placements +28% to 546 systems. Systems revenue grew 30% and instruments/accessories 18%; the da Vinci 5 installed base reached 2,023. Tariff costs were $23.4M in Q3 but $27.8M of IEEPA refunds reduced cost of revenue, and management guided to China instrument price cuts from Q4 2026 while adding a third-party remanufactured-instrument risk.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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