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No. of Recommendations: 1
I don’t particularly have a large position in them but I wish I had gotten into them sooner and in larger quantity, it’s been a good run for ISRG. If you got into them a few years ago, I’m sure you’ve done well. Don’t pay attention to share count due to stock split, it’s all about market cap and TAM.

To me I think it’s obvious. The results in the surgeries they do produce superior results(successful outcome, reduced recovery time, less collateral trauma). The DaVinci system is finding approval for more and more types of surgeries and in more and more countries (markets). Further they are a razor and blades business model, meaning each new system they sell will produce more recurring instrument and service revenue as surgeries start to be performed on those installed systems. 73% of revenue now lies in this recurring category and I believe that growth could accelerate as markets come online with the expanding base and as the concept of robotic surgery becomes more widely adopted.

Despite delivering systems for years now, they still largely have no real competition. They have millions of procedures under their belt and that experince combined with the unchallenged network they’ve established over the years provides a tremendous moat and competitive advantage.

The overwhelming majority of installed systems and procedures performed are in the US. International is growing much faster(from a smaller base). That is a very large untapped market.

ISRG, ILMN, and ABMD are my way of adding some strong companies outside of pure tech with promising TAM and CAP. They may not produce some of the returns that some biotech companies can produce, but I’ve decided to not let my portfolio do drugs. For me, it’s just too risky. And I like the recurring revenue of all three of those companies. I will be adding more ISRG probably sooner than later, though I don’t think they will consistently return 70%+ every year, they should be in for long term growth. I also have some Mazor(MZOR) they are an Israeli robotic surgery company that targets spine and brain procedures and would not compete with ISRG.

Numbers I like to look at

M Cap - $51.6B
Rev (TTM) - $3.13B
Rev Growth Q1 - 25%
P/S - 16.5

PE - 52
FPE - 41

G Margin - 70%
Op Margin - 34%
Op Cash flow - 1.14B (36% of rev)

$2B in cash with no debt

Pricey I expect them to stay that way.
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