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HSBC started coverage of Intuitive Surgical (NASDAQ:ISRG) with a buy rating, citing the company’s dominance in the surgical robotics space and recurring revenue stream.
HSBC noted that ISRG has an 80% market share, with high barriers to entry and “sticky” customers due to the high upfront costs of the equipment and time it takes to train surgeons on it. It noted that competition in the space was limited, with rivals either being much smaller or at an earlier stage of commercialization.
The investment bank also highlighted that over 70% of ISRG’s revenue was recurring and expected to climb to 77% in 2024, “a strong defensive quality which we think supports a premium valuation multiple.”
“It’s an expensive stock, but we like the business model and Intuitive’s strong competitive edge,” HSBC added.
The bank set its price target for the stock at $318.
