Intuitive's 2027 price cuts on high-volume instruments and in China slow revenue growth from about 20% to about 11%. At $407.99, about 28 times my 2028 earnings already fits that slower pace. Target $420.85, a hold.
Key points
- 3% to 5%: the cut in instrument revenue per procedure management expects from 2027 pricing actions, in full by late 2027.
- 10%: US da Vinci procedure growth in Q3 2026, the slowest since COVID. Overseas growth was 20%.
- 28 times: the price compared with my 2028 earnings of $14.51 a share. That is fair for growth in the low teens.
The call
The price assumes earnings keep growing near 18% a year. At $407.99, a buyer earning 9.5% a year who exits at 24 times earnings in 2031 needs earnings per share to grow about 18% a year for five years. That is close to the 2025 to 2026 pace, set while procedures grew 15% to 18% a year.
Revenue growth vs da Vinci procedure growth, year over year (%)- Revenue growth (reported)
- My revenue growth estimate
- da Vinci procedure growth
Source: Intuitive 10-Q/10-K XBRL, Oct 20 2026 release and calls; E = my estimates
I expect slower growth for the next two years, not a collapse. Procedures should grow about 12% in 2027. Instrument pricing then takes back about a point of revenue per case. Systems revenue cools after the da Vinci 5 upgrade wave. Revenue grows about 11% and earnings about 12%. Buybacks and a 40% operating margin hold up the rest. Lower prices may win more patients over time, but not within twelve months.
Valuation
| Step | Figure |
|---|
| 2026 adjusted earnings per share (Q4 estimated) | $11.46 |
| 2027 revenue, up about 11% | $13.5 billion |
| 2028 adjusted earnings per share | $14.51 |
| Multiple on 2028 earnings | 29 times |
| 12-month target | $420.85 |
Twenty-nine times is a premium to medtech peers. Intuitive has earned it with no debt, 84% recurring revenue and best-in-class margins. It is below the 34 times the stock fetched before the after-hours drop, because growth is stepping down. Each 3 turns of multiple moves the target by about $44. The two-sided risk shown in chart 2 supports a hold, not a buy.
Share value at different multiples of my 2028 EPS of $14.51 ($)My arithmetic; price $407.99 after hours Oct 20 2026
Risks
- US procedure growth slips below 10% if insurance coverage losses deepen. Watch US growth in the January report.
- Medtronic's Hugo, and Stryker selling CMR's Versius in the US, win ambulatory surgery center deals. Watch Intuitive's ASC placements and system prices.
- The court rejects the $450 million settlement, or the court order limits instrument and service terms. Watch the approval hearing in 2027.
What would change my mind
Two quarters of US procedure growth back at 13% or better after the price cuts would show that lower prices bring in more patients, and I would move to a buy.