Why Is Intuitive Surgical (ISRG) Stock Falling Despite an Earnings Beat?

TLDR

• Intuitive Surgical (ISRG) stock fell about 8% in premarket trading to around $405 on Wednesday after Q3 results.
• Adjusted EPS of $3.00 beat the $2.65 estimate, and revenue of $3.05 billion topped the $2.91 billion forecast.
• A $450 million antitrust settlement cut GAAP net income to $523 million, or $1.49 per diluted share.
• Management said instrument pricing cuts will lower revenue per procedure by about 3% to 5% once fully in place in 2027.
• U.S. procedure growth slowed to 10%, and the 2026 worldwide growth forecast was narrowed to 14% to 15%.

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Intuitive Surgical (ISRG) stock fell about 8% in premarket trading on Wednesday, dropping to roughly $405. The move came after the company reported third-quarter results that beat Wall Street estimates but carried a $450 million legal charge.

Intuitive Surgical, Inc., ISRG

The stock had closed Tuesday up 1.1%. It is now down about 23% in 2026, which puts it on pace for its worst year since 2022.

Adjusted earnings came in at $3.00 per share, well above the $2.65 consensus. Revenue rose 22% from a year ago to $3.05 billion, ahead of the $2.91 billion estimate.

INTUITIVE SURGICAL $ISRG Q3’26 EARNINGS HIGHLIGHTS

🔹 Revenue: $3.05B (Est. $2.91B) 🟢; +22% YoY
🔹 Adj. EPS: $3.00 (Est. $2.64) 🟢; +25% YoY
🔹 GAAP EPS: $1.49; -24% YoY
🔹 Adj. Gross Margin: 69.9%

FY26 Guide:
🔹 da Vinci Procedure Growth: ~+14%-+15%
🔹 Adj. Gross Margin:… pic.twitter.com/iI8NEP5G8a

— Wall St Engine (@wallstengine) October 20, 2026

So why the slide? Investors looked past the beat and zeroed in on what came with it.

The Settlement Weighs on Profit

Intuitive agreed to pay $450 million to settle the da Vinci antitrust class action. The case dates back to 2021, when hospital operators accused the company of anticompetitive practices tied to servicing and repairing instruments. Intuitive did not admit wrongdoing, and the deal needs court approval.

The charge cut third-quarter reported earnings by 99 cents a share. GAAP net income fell to $523 million, or $1.49 per diluted share, from $704 million, or $1.95 per share, a year earlier.

Pricing Cuts and Slower U.S. Growth

On the earnings call, management put numbers on planned price reductions. These include an extended-use instrument program in the U.S. and a China price cut that starts in November.

Together, they are expected to lower instrument and accessory revenue per procedure by about 3% to 5% once fully in place in 2027. That figure is based on a mix-constant basis. Instruments and accessories are the core of the company’s recurring revenue, so the guidance drew attention fast.

U.S. da Vinci procedure growth was just 10%, the softest domestic reading since the COVID era. International procedures grew 20%, and total procedures rose 15%.

The company narrowed its 2026 worldwide procedure growth forecast to 14% to 15%. The prior range was 13.5% to 15.5%, and management expects growth near the midpoint.

There were bright spots in the quarter. Intuitive placed 546 da Vinci systems, up 28% from a year earlier. Ion procedures grew 31%, and instruments and accessories revenue rose 18% to $1.8 billion.

Competition is also in the picture. Johnson & Johnson’s Ottava system won regulatory approval in July, and Medtronic’s Hugo system was cleared for urological procedures in December 2025.

The broader market gave no cushion. The S&P 500 added about 0.1% and the Nasdaq gained about 0.4%, so the drop looks tied to company news.

JPMorgan kept its Overweight rating and raised its price target to $475 after the results. Even so, the stock was down about 8% in Wednesday premarket trading, near $405.