Groundbreaking Tech, Stretched Valuations, and New Leadership
Surgical robots are one of the most fascinating areas, not just in medtech, but overall. The technology feels like science fiction turned real, and it will without doubt shape the future of surgical procedures. I’d like to highlight two names in this space: Intuitive Surgical and PROCEPT BioRobotics. Both are pioneers, both are innovating, but the investment case is very different.
Let’s start with Intuitive Surgical. This is the undisputed heavyweight of surgical robots, a super high-quality company that has delivered for years. Their da Vinci systems have basically become the industry standard. The company has an impeccable track record, immaculate reputation, and is the single most important defining power in the surgical robots sector. But here’s the catch: valuation. With a forward EV/revenue north of 15 and a forward P/E around 60, the stock is priced for absolute perfection. Nothing material has changed in the business — yet shares have retreated almost 30% from highs over the past months. To me, that looks like investors finally questioning if paying such a premium is still justified. I love the company, I admire the moat, but at these levels it would need to come down a fair bit more for me to even consider buying. The new CEO, stepping in after Gary Guthart’s retirement, who played a crucial role in the company’s success over the last 15 years, will also need to prove himself. That’s no small task when expectations are sky-high. And yes, Intuitive Surgical doesn’t really disappoint, but from the looks of it, even that isn’t enough anymore. At current valuation levels, the market needs more than solid quarters and silent progress. It needs something groundbreaking.
PROCEPT, on the other hand, is a very different story. They focus on men’s health, especially procedures like benign prostate hyperplasia (BPH), with their AquaBeam robotic system. Unlike Intuitive, the stock looks attractive on valuation: a forward EV/revenue of around 5, with rapid mid-double-digit revenue growth. The stock is still down more than 60% from all-time highs, despite a clear path forward. Why then? Profitability. They’re getting closer every year, but they haven’t crossed that line yet. Investors want to see it — and until then, volatility is part of the game. The company prioritizes top-line growth over margin expansion at the moment, which is a fair strategy, however over time management will need to show if they can make PROCEPT into a cash monster of a similar stature to Intuitive. Like Intuitive, PROCEPT also has a new CEO stepping in. He’ll have to show that execution continues seamlessly, especially with growth expectations this high.
The contrast between the two is clear: Intuitive is the established leader with stretched multiples and stability, while PROCEPT is the scrappy disruptor with growth, lower multiples, and profitability questions. Both are fascinating in their own right. Personally, I am close to opening a position in PROCEPT — still weighing it in my head. For Intuitive, as much as I like the business, it would have to come down a lot more before I’d buy. I just can’t see the potential at these levels, but for PROCEPT though…
