Intuitive

Franklin Street Advisors disclosed an exit from Intuitive Surgical (ISRG -0.92%) in its latest SEC filing for the quarter ended September 30, selling 42,601 shares for an estimated $23.2 million.

What Happened

According to a filing with the Securities and Exchange Commission released on Thursday, Franklin Street Advisors sold its entire holding in Intuitive Surgical, divesting 42,601 shares. The estimated value of the transaction, calculated using the average market price during the quarter, was approximately $23.2 million.

What Else to Know

Franklin Street Advisors’ Intuitive Surgical position previously comprised 1.4% of the fund’s 13F assets.

Top holdings after the filing:

• NVDA: $132.2 million (7.6% of AUM)
• MSFT: $115.2 million (6.6% of AUM)
• AAPL: $110.4 million (6.4% of AUM)
• GOOGL: $91.2 million (5.3% of AUM)
• AMZN: $72.5 million (4.2% of AUM)

As of Thursday afternoon, shares of Intuitive Surgical were priced at $443.87, down 9.5% over the past year and underperforming the S&P 500’s 16% gain.

Company Overview

Company Snapshot

• Intuitive Surgical offers the da Vinci Surgical System for minimally invasive surgery and the Ion endoluminal system for diagnostic lung procedures, along with surgical instruments, digital solutions, and support services.
• The company generates revenue primarily through the sale of surgical systems, recurring instrument and accessory sales, and service contracts for its installed base.
• It serves hospitals, surgical centers, and healthcare providers globally, targeting institutions seeking advanced minimally invasive surgical capabilities.

Intuitive Surgical, Inc. develops, manufactures, and markets products that enable physicians and healthcare providers to enhance the quality of, and access to, minimally invasive care in the United States and internationally. Its strategic focus on innovation and expanding procedure adoption underpins its long-term growth trajectory.

Foolish take

Franklin Street Advisors’ $23.2 million sale of its entire Intuitive Surgical position marks a clear step back from the medical robotics firm after a volatile year for the stock. Shares have fallen more than 25% from their all-time high in January, as investors weigh valuation concerns and new tariff-related risks that management warned could trim 2025 margins by about 1 percentage point.

In its second-quarter 2025 earnings, Intuitive posted revenue of $2.4 billion, up 21% year-over-year, with worldwide da Vinci procedure volume climbing 17%. Meanwhile, GAAP net income rose 25% to $658 million ($1.81 per share). Yet even with expanding adoption, tightening gross margins—driven by higher input costs and tariffs on components from Mexico, Germany, and China—tempered enthusiasm.

CEO Dave Rosa said Intuitive remains “committed to advancing care” and expanding access to minimally invasive surgery worldwide. But after a multi-year run-up, Franklin’s decision to take profits may signal growing caution among institutional investors who see near-term headwinds outpacing the company’s impressive long-term growth story.

Glossary

13F reportable assets: Assets that institutional investment managers must disclose quarterly to the SEC, showing their holdings in U.S. publicly traded securities.
Assets under management (AUM): The total market value of investments that a fund or firm manages on behalf of clients.
Full exit: When an investor sells all shares of a particular holding, eliminating exposure to that asset.
Stake: The amount of ownership or investment a fund or individual holds in a company or asset.
Filing: An official document submitted to a regulatory authority, such as the SEC, to disclose financial or operational information.
Divesting: Selling off an asset or investment, often to reduce risk or change portfolio strategy.
Minimally invasive surgery: Surgical procedures performed through small incisions, often using specialized instruments or robotic systems.
Installed base: The total number of a company’s products currently in use by customers.
Service contracts: Agreements for ongoing maintenance, support, or services related to products sold.
Procedure adoption: The rate at which new medical procedures or technologies are implemented by healthcare providers.
TTM: The 12-month period ending with the most recent quarterly report.

If you don’t know much about Intuitive Surgical (ISRG 1.71%), you might want to remedy that. It’s a very impressive growth stock. Its past performance is likely to wow you, and its future looks very promising.

Over the past decade, Intuitive Surgical stock has grown in value at an average annual rate of 23%. Over the past three years, that growth rate ramped up to nearly 30%! If you had invested $10,000 in Intuitive a decade ago, your stake would be worth roughly $80,610 today. The S&P 500 index, in contrast, averaged 13.6% in that period, turning $10,000 into $33,720 — a still-quite-solid performance.

Image source: Gertty Images.

Intuitive Surgical is a leader in robotic surgery equipment. It has more than 9,900 of its million-dollar-plus da Vinci robotic surgery systems installed in 72 countries. Together, the systems have been used to perform more than 16 million procedures.

Its business model is delightful, too, as it derives 84% of its revenue not from the costly systems themselves but from rather dependable recurring sales of servicing, supplies, and accessories for the machines. Once a hospital has committed to a da Vinci machine, it can’t go elsewhere for servicing and supplies.

And as our world’s population ages, there’s likely to be more demand for the kinds of procedures that Intuitive Surgical’s machines facilitate, such as colorectal surgery, cardiac surgery, hernia surgery, and more. Intuitive’s Ion systems also facilitate lung procedures.

According to some metrics, Intuitive’s stock is not a bargain right now; for example, its forward-looking price-to-earnings (P/E) ratio was recently 51, which is on the steep side. But that’s still well below the stock’s five-year average of 56. That’s because the stock has pulled back recently, presenting a tempting buying opportunity for interested long-term investors.