Two top investors are optimistic about this healthcare stock, but is it really worth buying?

Looks like a good reason

Cathie Wood of Ark Invest and hedge fund giant Izzy Englander both hold positions in Intuitive Surgical (ISRG), a company that has monopolized the market with its da Vinci surgical robot system for 20 years. The endorsement from both leaders sounds very convincing.

But there is a problem here: the current penetration rate of remote surgery by medical robots is less than 5%, while competition is intensifying. Medtronic's Hugo system has strong clinical data and is about to be approved by the US FDA; Johnson & Johnson's Ottava system is also on the way. Tariff risks are also eroding profit margins.

Where is the real business logic?

Selling the machines themselves is just the surface. The core cash cow of Intuitive is surgical consumables—these need to be replaced frequently, and the profit margin is even higher than the machines themselves. As the installation volume increases, the proportion of consumable revenue will become larger and larger, which is why the big players can tolerate a 48 times PE (the average for medical equipment is only 17.4 times).

Key Data:

• Global aging drives continuous growth in surgical volume
• Robotic minimally invasive surgery has a faster recovery and fewer complications compared to open surgery.
• Even with intensified competition, a 5% market penetration rate means there is still 95% growth potential.

Is the valuation premium reasonable?

It depends on your time frame. In the short term (1-2 years), tariffs and competitive pressure are indeed hidden risks. However, if you can hold for more than 10 years, Intuitive's moat (strong doctor stickiness, machine learning accumulation, ecological protocols) is enough to justify a high valuation.

There are indeed stories that say “cheap goods can skyrocket” (Netflix, Nvidia), but the long-term winners are often those high-quality businesses that look expensive. The question is: Are you ready to hold for the long term, or are you looking to speculate in the short term?