After the drop, the stock pays 32 times next year’s earnings. I model $12.75 of 2027 non-GAAP profit at 36 times, a $459 share, about 12 percent above $408.
Key points
- 14% da Vinci procedure growth in Q3, with full-year guidance narrowed to 14%, 15% at the midpoint.
- $3.05 billion Q3 revenue, up 22%, and non-GAAP EPS of $3.00, up 25%.
- $2.94 billion of stock bought back in the quarter, 7.8 million shares.
The call
The $408 share requires about 32 times my $12.75 of 2027 non-GAAP earnings. That is a discount to what a 15 percent grower with 30 percent operating margins and no debt has usually paid.
I believe 36 times is the better twelve-month multiple. Procedures still compound in the mid-teens, instruments are 59 percent of sales, and cash generation funds buybacks. The market is too pessimistic today after the guidance trim and the $450 million settlement.
Revenue by quarter ($ billions)Company reports through Q3 2026; Q4 2026E and 2027E are mine
Valuation
| Item | Figure |
|---|
| 2026E revenue | $12.1 billion |
| 2027E revenue | $13.9 billion |
| 2027E non-GAAP EPS | $12.75 |
| Multiple | 36 times |
| 12-month target | $459 |
Thirty-six times sits below the 40-plus multiple the stock carried at $600. Being right on growth and mix is worth more than the 12 percent upside; a miss on procedures would cut the multiple faster than earnings.
da Vinci procedure growth vs revenue growth- da Vinci procedure growth
- Revenue growth
Company procedure growth from earnings releases; revenue from SEC facts
Risks
- U.S. procedure growth could slow further if insurance and GLP-1 keep deferring benign cases; watch quarterly da Vinci growth versus 14%.
- Longer instrument lives or competition in China could cut revenue per case; watch instruments-and-accessories growth versus procedure growth.
- Court rejection of the $450 million settlement would reopen the charge and legal overhang.
What would change my mind
A full-year da Vinci procedure print below 13 percent, or 2027 non-GAAP earnings guidance implying less than $12 a share.