Intuitive Surgical (ISRG -3%) reported strong Q4 results, surpassing expectations in revenue and earnings. The company saw robust procedure growth, with system placements growing at a similar pace. ISRG maintained its FY25 guidance, anticipating a 13-16% increase in procedures, building on a 17% rise in FY24.

Why Are Shares Down? ISRG's Q4 revenue expectations were set at $2.41 billion, leading shares to hit record highs with a 14% surge over five trading days. This followed an already high stock price, resulting in profit-taking today.

• ISRG met its Q4 projections, achieving 25.2% year-over-year revenue growth to $2.41 billion, with an 18% increase in global da Vinci procedures. The company placed 493 da Vinci systems, including 174 da Vinci 5 systems, marking a 19% year-over-year gain.
• Investors focused on management's comments, noting a small decline in bariatric procedures due to the rise of GLP-1 medications, with a low to mid-single-digit decrease in the U.S., consistent with Q3.
• Positive trends included a significant increase in U.S. placements, with over 35% growth in the second half of 2024. However, system utilization, an important metric linked to patient demand and hospital health, rose only slightly. ISRG believes utilization has room to grow.
• For 2025, ISRG expects non-GAAP gross margins to be slightly lower than 2024, targeting 67-68% compared to 69.1% last year. This forecast excludes potential tariff impacts, which could be significant. ISRG remains confident in achieving margins above 70% in the medium term as it enhances margins in specific surgical systems.

With Q4 results already anticipated, minor issues were amplified. Despite a decline in bariatric procedures and a slight margin dip for FY25, today's market reaction is likely due to recent stock gains and high valuation multiples. At a 72x forward earnings multiple, ISRG is vulnerable to profit-taking on unexpected challenges, including tariffs.