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