Intuitive Surgical (NASDAQ:ISRG) could see an upside of over 30% to its stock price, if da Vinci systems garners 25% share in the global surgical robots market. The da Vinci surgical systems have seen strong growth in the recent years with sales exceeding $1.1 billion in 2018, reflecting a growth of over 21% over the prior year. According to Trefis analysis, this can be attributed to an overall increase in demand for the robotic surgical procedures, given its advantages to both surgeons and patients. Below we discuss the upside potential for Intuitive Surgical based on its da Vinci systems sales growth. We have created an interactive dashboard analysis ~ What’s The Upside For Intuitive Surgical If da Vinci Systems Garners 25% Share of The Global Surgical Robots Market By 2025? You can adjust various drivers to see the impact on the adjusted earnings, and price estimate, based on da Vinci sales. Also, here’s more Healthcare Data.
da Vinci Systems’ Current Market Share ~ 17%
The da Vinci systems current market share of 17% is derived from its reported sales of $1.1 billion, and an estimated global surgical robots market size of a little over $6.8 billion in 2018. The da Vinci systems are computer assisted surgical systems that help surgeons perform minimally invasive surgeries by controlling the device from a console. The system has multiple arms that are used to hold operating tools to perform the surgery, along with an endoscopic camera, which enables the surgeons to look inside the body with a 3-D view.
Global Surgical Robots Market Size Is Estimated To Grow In Low Teens
The global surgical robots market is estimated to grow at a CAGR of 13.8% to $17 billion by 2025. This growth will likely be led by higher demand for minimally invasive procedures. It is estimated that over one million surgeries were performed using da Vinci systems in 2018, and over six million since its launch.
If da Vinci systems manages to garner 25% market share by 2025 as compared to 17% currently, it will result in incremental sales of over $1.4 billion. This is possible given that the da Vinci system has several advantages over regular surgical procedures. The surgical systems not only provides surgeons with a similar range of motion as the human wrist in the surgical field, it also removes the instability of the human hand. Additionally, these minimally invasive surgeries have the benefits of reduced surgical complications, faster recovery processes, and lower hospitalization costs. Also, these surgical systems have been widely adopted for select procedures, but there are still many for which they have not been adopted. Until a few years back, the most common procedures were prostatectomies and hysterectomies, which accounted for more than 50% of total procedures using da Vinci systems. However other procedures are being adopted at a growing rate and we expect this to continue in the future. A wider range of possible procedures will likely result in greater demand for the company’s systems. Given these factors, da Vinci systems will likely see continued strong growth in the coming years, and garner higher share in the global surgical robots market.
How Does da Vinci Systems’ Market Share Gains Impact Intuitive Surgical’s Earnings & Price Estimate?
If da Vinci systems manages to garner 25% share in the global surgical robots market, it will result in $3.95 incremental earnings on an adjusted basis. We use 34.5% adjusted net income margin, similar to that for overall Intuitive Surgical in calculating the EPS impact. We use a price to earnings multiple of 47x to arrive at a $186 impact on Intuitive Surgical’s share price, or a 33% increase to its current market price of $562.
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