3 Reasons Intuitive Surgical, Inc. Stock Could Rise

3 Reasons Intuitive Surgical, Inc. Stock Could Rise

In a previous article, I laid out the bear case against Intuitive Surgical (NASDAQ: ISRG). Today, I'm looking at some ways the robotic surgery leader's stock could trend higher in the years ahead.

The beauty of Intuitive's business model resides in its razor-and-blades strategy. Each da Vinci Surgical System that Intuitive sells generates a stream of high-margin recurring revenue from the sale of instruments and accessories used by the surgeons conducting operations. Intuitive also typically enters into annual service contracts that can bring in as much as $170,000 annually per machine.

In all, 71% of Intuitive's revenue -- or $1.9 billion -- was of the recurring variety in 2016, up from 70%, or $1.7 billion, in 2015. These figures should continue their ascent in the coming years as Intuitive grows its installed base of robotic systems and the number of ways in which its machines can be used.

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Source: Fool.com