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Intuitive Surgical, Inc. (ISRG) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Intuitive Surgical, Inc. (ISRG)

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Intrinsic Value (DCF)

Current$572.75
→
Intrinsic$92.77
-84%
$63.92$92.77$150.17
Current price reflects execution expectations above 13% growth — not unreasonable for quality businesses.
Range: Bear $64 → Bull $150. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $150).
Discount ↓Growth →9%11%13%15%
8%$114$123$133$144
10%$80$86$93$100
12%$62$66$71$77
14%$51$54$58$62

Bull Case

  • Bull case ($150) with 16% growth, 8% discount rate
  • Conservative 13% growth assumption is achievable based on track record

Bear Case

  • Bear case ($64) implies 89% downside at 11% growth, 12% discount
  • Trading 84% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($150) — requires exceptional execution
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5-Year Free Cash Flow Projection

Year 1$1.48B
Year 2$1.67B
Year 3$1.89B
Year 4$2.15B
Year 5$2.43B
Terminal$38.53B

📐 Model Inputs

Growth Rate13.3%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.30BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is ISRG stock undervalued or overvalued?
🔴 OVERVALUED

ISRG trades at $572.75 vs. our DCF-derived intrinsic value of $92.77, implying -84% downside. Using a 9.5% WACC and 13.3% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($133.32) suggests limited upside.

What is ISRG's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.30B, projected at 13.3% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-1.88B net debt and dividing by 0.36B shares: Bear $64.73 | Base $92.77 | Bull $133.32. Current price $572.75 implies -84% to base case.

How is ISRG's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 13.3% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($31.70B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 24.3x.