Bank of America Securities connected with Intuitive Surgical Inc (NASDAQ:ISRG) on reprocessing “noise” in the market.
Analyst Travis Steed highlighted that reprocessing is not new to Intuitive, even though it might seem like new news to some investors.
What Happened: For the unversed, in March this year, Restore Robotics received 510(k) clearance from the U.S. Food and Drug Administration (FDA) for remanufacturing Intuitive Surgical’s Da Vinci Xi Monopolar Scissors as of March 11, 2025, through its subsidiary Iconocare Health.
In a statement, Restore Robotics said it is offering hospitals and surgery centers a cost-effective and sustainable alternative to purchasing instruments from the original manufacturer.
Also Read: Analysts Remain Bullish On Intuitive Surgical Despite Macro Uncertainty
In May, Restore Robotics announced that Dr. Eugene Dickens at Hillcrest Medical Center in Tulsa, Oklahoma, conducted the first in-human use of a remanufactured da Vinci Xi robotic instrument on a patient using the newest model robotic surgical system, the da Vinci 5.
In addition, Panama City Surgery Center performed the first in-human use on a da Vinci Xi, which is the workhorse of the da Vinci robotics surgical systems.
Restore Robotics said it is working on getting clearances for other da Vinci robotic instruments.
Why It Matters: Deutsche Bank downgraded Intuitive Surgical from Hold to Sell on Monday, lowering the price forecast from $515 to $440.
BofA analyst Steed noted that some companies have offered services for Intuitive’s surgical robots and sold remanufactured instruments for years.
Intuitive does not ban third-party remanufactured instruments as long as they have received 510(k) clearance or a similar approval from the FDA.
The company also clarified that it won’t cancel service contracts, stop doing business, or consider it a contract violation if a U.S. customer uses these FDA-cleared, third-party instruments.
On Friday, BofA maintained the Buy rating with a price forecast of $650 and sees continued potential upside to Street estimates.
“One thing that gives us some comfort that reprocessing will only be a small share of the market over the long term is reprocessing today is only a small low single-digit percent headwind on Medtronic Plc’s (NYSE:MDT) global surgical business and its isolated mostly in its US vessel sealing and dissection product lines.”
BofA thinks reprocessing in robotic instruments will only be a small share of customers and tries to innovate accordingly.
On Wednesday, an analyst note by William Blair on this development suggested that hospitals investing millions of dollars in a robotics program will take a pause at operating outside the Intuitive Surgical ecosystem.
The high cost and critical nature of these surgical investments make operating outside of Intuitive’s established and supported ecosystem a significant risk for healthcare providers, the note added.
Currently, the threat is considered minimal as only one third-party instrument has received FDA clearance, and Intuitive does not offer direct support for such products. While the analyst acknowledged this as a potential long-term risk to watch, the immediate impact is expected to be limited.
Therefore, despite negative headlines that could cause short-term volatility for the premium-valued stock (cited at 57 times 2026 EPS), analyst Brandon Vazquez of William Blair maintains an Outperform rating on the company.
Price Action: ISRG stock is trading lower by 0.72% to $516.70 at last check Friday.
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