Intuitive Surgical, Inc. - Revision history

>Dinil.wanni: /* Finances */

2023-08-11T09:44:01Z

Finances

← Older revision		Revision as of 10:44, 11 August 2023
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	Having completed a forecast and calculated the WACC, the DCF method was implemented to arrive at an enterprise value of $24,058,196,080. The terminal value was calculated using a perpetual growth rate of 2%, which is estimated to be in line with US’s future GDP growth rate. After discounting the cash flows using the WACC and arriving at an enterprise value, an equity value of $28,085,096,080 was then estimated. Thereafter, an implied share price of $80.40 was calculated by dividing the equity value by the number of shares outstanding (351 million shares). Based on this valuation and relative to the actual share price of $305.32, ISRG would be viewed as being overvalued.		Having completed a forecast and calculated the WACC, the DCF method was implemented to arrive at an enterprise value of $24,058,196,080. The terminal value was calculated using a perpetual growth rate of 2%, which is estimated to be in line with US’s future GDP growth rate. After discounting the cash flows using the WACC and arriving at an enterprise value, an equity value of $28,085,096,080 was then estimated. Thereafter, an implied share price of $80.40 was calculated by dividing the equity value by the number of shares outstanding (351 million shares). Based on this valuation and relative to the actual share price of $305.32, ISRG would be viewed as being overvalued.

	== Risks ==		== Risks ==

>Dinil.wanni: /* Finances */

2023-08-11T09:43:33Z

Finances

← Older revision		Revision as of 10:43, 11 August 2023
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	Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.		Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.

	[[File:ISRG WACC.png\|~~left~~\|~~thumb~~]]		[[File:ISRG WACC.png\|thumb\|center]]

	[[File:ISRG Terminal Value.png\|center\|thumb\|339x339px]]		[[File:ISRG Terminal Value.png\|center\|thumb\|339x339px]]



	The weighted average cost of capital (WACC) is used as the discount rate in the DCF model, as free cash flows to the firm (FCFF) are used to calculate the enterprise value of the firm. The cost of equity (11.8%) was calculated using the capital asset pricing model (CAPM). The risk-free rate (4.084%) was assumed to be the U.S. 10 Year Treasury. The beta (1.3) is the 5-year monthly historical beta of ISRG according to Yahoo Finance. The market return (9.89%) is taken to be the 30-year average return of the NASDAQ, where ISRG is listed. While the 30-year average can be argued to be extensive, a more conservative valued seemed appropriate considering the 17% 5-year AAR and 14.8% 10-year AAR. The cost of debt (0%) was calculated as the company has no interest expense despite the $95 million in debt. This maybe due to ISRG having no debt till 2020 where total debt was reported as $80 million (2020), $87 million (2021) and $95 million (2022).		The weighted average cost of capital (WACC) is used as the discount rate in the DCF model, as free cash flows to the firm (FCFF) are used to calculate the enterprise value of the firm. The cost of equity (11.8%) was calculated using the capital asset pricing model (CAPM). The risk-free rate (4.084%) was assumed to be the U.S. 10 Year Treasury. The beta (1.3) is the 5-year monthly historical beta of ISRG according to Yahoo Finance. The market return (9.89%) is taken to be the 30-year average return of the NASDAQ, where ISRG is listed. While the 30-year average can be argued to be extensive, a more conservative valued seemed appropriate considering the 17% 5-year AAR and 14.8% 10-year AAR. The cost of debt (0%) was calculated as the company has no interest expense despite the $95 million in debt. This maybe due to ISRG having no debt till 2020 where total debt was reported as $80 million (2020), $87 million (2021) and $95 million (2022).

	[[File:ISRG DCF.png~~\|left~~\|thumb\|732x732px]]		[[File:ISRG DCF.png\|thumb\|732x732px\|center]]
	[[File:ISRG Sensitivity.png~~\|left~~\|thumb\|728x728px]]		[[File:ISRG Sensitivity.png\|thumb\|728x728px\|center]]














	Having completed a forecast and calculated the WACC, the DCF method was implemented to arrive at an enterprise value of $24,058,196,080. The terminal value was calculated using a perpetual growth rate of 2%, which is estimated to be in line with US’s future GDP growth rate. After discounting the cash flows using the WACC and arriving at an enterprise value, an equity value of $28,085,096,080 was then estimated. Thereafter, an implied share price of $80.40 was calculated by dividing the equity value by the number of shares outstanding (351 million shares). Based on this valuation and relative to the actual share price of $305.32, ISRG would be viewed as being overvalued.		Having completed a forecast and calculated the WACC, the DCF method was implemented to arrive at an enterprise value of $24,058,196,080. The terminal value was calculated using a perpetual growth rate of 2%, which is estimated to be in line with US’s future GDP growth rate. After discounting the cash flows using the WACC and arriving at an enterprise value, an equity value of $28,085,096,080 was then estimated. Thereafter, an implied share price of $80.40 was calculated by dividing the equity value by the number of shares outstanding (351 million shares). Based on this valuation and relative to the actual share price of $305.32, ISRG would be viewed as being overvalued.

	== Risks ==		== Risks ==

>Dinil.wanni: /* Finances */

2023-08-11T09:40:59Z

Finances

← Older revision		Revision as of 10:40, 11 August 2023
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	== Finances ==		== Finances ==
	[[File:ISRG UFCF Projections.png~~\|left~~\|thumb\|1226x1226px\|~~border~~]]		[[File:ISRG UFCF Projections.png\|thumb\|1226x1226px\|center]]

	Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.		Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.

>Dinil.wanni: /* Finances */

2023-08-11T09:39:59Z

Finances

← Older revision		Revision as of 10:39, 11 August 2023
Line 180:		Line 180:

	== Finances ==		== Finances ==
	[[File:ISRG UFCF Projections.png\|left\|thumb\|~~1082x1082px~~]]		[[File:ISRG UFCF Projections.png\|left\|thumb\|1226x1226px\|border]]

	Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.		Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.

>Dinil.wanni: /* Finances */

2023-08-11T09:39:06Z

Finances

← Older revision		Revision as of 10:39, 11 August 2023
Line 180:		Line 180:

	== Finances ==		== Finances ==
			[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]

			Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.

			[[File:ISRG WACC.png\|left\|thumb]]

			[[File:ISRG Terminal Value.png\|center\|thumb\|339x339px]]



			The weighted average cost of capital (WACC) is used as the discount rate in the DCF model, as free cash flows to the firm (FCFF) are used to calculate the enterprise value of the firm. The cost of equity (11.8%) was calculated using the capital asset pricing model (CAPM). The risk-free rate (4.084%) was assumed to be the U.S. 10 Year Treasury. The beta (1.3) is the 5-year monthly historical beta of ISRG according to Yahoo Finance. The market return (9.89%) is taken to be the 30-year average return of the NASDAQ, where ISRG is listed. While the 30-year average can be argued to be extensive, a more conservative valued seemed appropriate considering the 17% 5-year AAR and 14.8% 10-year AAR. The cost of debt (0%) was calculated as the company has no interest expense despite the $95 million in debt. This maybe due to ISRG having no debt till 2020 where total debt was reported as $80 million (2020), $87 million (2021) and $95 million (2022).

	[[File:ISRG DCF.png\|left\|thumb\|732x732px]]		[[File:ISRG DCF.png\|left\|thumb\|732x732px]]
Line 196:		Line 205:


	~~[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]~~

	Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.

	~~[[File:ISRG WACC.png\|left\|thumb]]~~

	The weighted average cost of capital (WACC) is used as the discount rate in the DCF model, as free cash flows to the firm (FCFF) are used to calculate the enterprise value of the firm. The cost of equity (11.8%) was calculated using the capital asset pricing model (CAPM). The risk-free rate (4.084%) was assumed to be the U.S. 10 Year Treasury. The beta (1.3) is the 5-year monthly historical beta of ISRG according to Yahoo Finance. The market return (9.89%) is taken to be the 30-year average return of the NASDAQ, where ISRG is listed. While the 30-year average can be argued to be extensive, a more conservative valued seemed appropriate considering the 17% 5-year AAR and 14.8% 10-year AAR. The cost of debt (0%) was calculated as the company has no interest expense despite the $95 million in debt. This maybe due to ISRG having no debt till 2020 where total debt was reported as $80 million (2020), $87 million (2021) and $95 million (2022).

	~~[[File:ISRG Terminal Value.png\|center\|thumb\|339x339px]]~~

	Having completed a forecast and calculated the WACC, the DCF method was implemented to arrive at an enterprise value of $24,058,196,080. The terminal value was calculated using a perpetual growth rate of 2%, which is estimated to be in line with US’s future GDP growth rate. After discounting the cash flows using the WACC and arriving at an enterprise value, an equity value of $28,085,096,080 was then estimated. Thereafter, an implied share price of $80.40 was calculated by dividing the equity value by the number of shares outstanding (351 million shares). Based on this valuation and relative to the actual share price of $305.32, ISRG would be viewed as being overvalued.		Having completed a forecast and calculated the WACC, the DCF method was implemented to arrive at an enterprise value of $24,058,196,080. The terminal value was calculated using a perpetual growth rate of 2%, which is estimated to be in line with US’s future GDP growth rate. After discounting the cash flows using the WACC and arriving at an enterprise value, an equity value of $28,085,096,080 was then estimated. Thereafter, an implied share price of $80.40 was calculated by dividing the equity value by the number of shares outstanding (351 million shares). Based on this valuation and relative to the actual share price of $305.32, ISRG would be viewed as being overvalued.

	~~[[File:ISRG DCF.png\|left\|thumb\|732x732px]]~~
	~~[[File:ISRG Sensitivity.png\|left\|thumb\|728x728px]]~~

	== Risks ==		== Risks ==

>Dinil.wanni: /* Finances */

2023-08-11T09:36:33Z

Finances

← Older revision		Revision as of 10:36, 11 August 2023
Line 180:		Line 180:

	== Finances ==		== Finances ==
	~~[[File:ISRG WACC.png\|left\|thumb]]~~
	~~[[File:ISRG Terminal Value.png\|center\|thumb\|339x339px]]~~


Line 200:		Line 198:
	[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]		[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]

			Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.

			[[File:ISRG WACC.png\|left\|thumb]]

			The weighted average cost of capital (WACC) is used as the discount rate in the DCF model, as free cash flows to the firm (FCFF) are used to calculate the enterprise value of the firm. The cost of equity (11.8%) was calculated using the capital asset pricing model (CAPM). The risk-free rate (4.084%) was assumed to be the U.S. 10 Year Treasury. The beta (1.3) is the 5-year monthly historical beta of ISRG according to Yahoo Finance. The market return (9.89%) is taken to be the 30-year average return of the NASDAQ, where ISRG is listed. While the 30-year average can be argued to be extensive, a more conservative valued seemed appropriate considering the 17% 5-year AAR and 14.8% 10-year AAR. The cost of debt (0%) was calculated as the company has no interest expense despite the $95 million in debt. This maybe due to ISRG having no debt till 2020 where total debt was reported as $80 million (2020), $87 million (2021) and $95 million (2022).

			[[File:ISRG Terminal Value.png\|center\|thumb\|339x339px]]

			Having completed a forecast and calculated the WACC, the DCF method was implemented to arrive at an enterprise value of $24,058,196,080. The terminal value was calculated using a perpetual growth rate of 2%, which is estimated to be in line with US’s future GDP growth rate. After discounting the cash flows using the WACC and arriving at an enterprise value, an equity value of $28,085,096,080 was then estimated. Thereafter, an implied share price of $80.40 was calculated by dividing the equity value by the number of shares outstanding (351 million shares). Based on this valuation and relative to the actual share price of $305.32, ISRG would be viewed as being overvalued.

			[[File:ISRG DCF.png\|left\|thumb\|732x732px]]
			[[File:ISRG Sensitivity.png\|left\|thumb\|728x728px]]















	Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.

	~~The weighted average cost of capital (WACC) is used as the discount rate in the~~ DCF model, as free cash flows to the firm (FCFF) are used to calculate the enterprise value of the firm. The cost of equity (11.8%) was calculated using the capital asset pricing model (CAPM). The risk-free rate (4.084%) was assumed to be the U.S. 10 Year Treasury. The beta (1.3) is the 5-year monthly historical beta of ISRG according to Yahoo Finance. The market return (9.89%) is taken to be the 30-year average return of the NASDAQ, where ISRG is listed. While the 30-year average can be argued to be extensive, a more conservative valued seemed appropriate considering the 17% 5-year AAR and 14.8% 10-year AAR. The cost of debt (0%) was calculated as the company has no interest expense despite the $95 million in debt. This maybe due to ISRG having no debt till 2020 where total debt was reported as $80 million (2020), $87 million (2021) and $95 million (2022).

	Having completed a forecast and calculated the WACC, the DCF method was implemented to arrive at an enterprise value of $24,058,196,080. The terminal value was calculated using a perpetual growth rate of 2%, which is estimated to be in line with US’s future GDP growth rate. After discounting the cash flows using the WACC and arriving at an enterprise value, an equity value of $28,085,096,080 was then estimated. Thereafter, an implied share price of $80.40 was calculated by dividing the equity value by the number of shares outstanding (351 million shares). Based on this valuation and relative to the actual share price of $305.32, ISRG ~~would be viewed as being overvalued~~.

	== Risks ==		== Risks ==

>Dinil.wanni: /* Finances */

2023-08-11T09:33:47Z

Finances

← Older revision		Revision as of 10:33, 11 August 2023
Line 199:		Line 199:

	[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]		[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]

>Dinil.wanni: /* Finances */

2023-08-11T09:33:09Z

Finances

← Older revision		Revision as of 10:33, 11 August 2023
Line 199:		Line 199:

	[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]		[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]

>Dinil.wanni: /* Finances */

2023-08-11T09:32:42Z

Finances

← Older revision		Revision as of 10:32, 11 August 2023
Line 199:		Line 199:

	[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]		[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]

>Dinil.wanni: /* Finances */

2023-08-11T09:32:19Z

Finances

← Older revision		Revision as of 10:32, 11 August 2023
Line 196:		Line 196:




			[[File:ISRG UFCF Projections.png\|left\|thumb\|1082x1082px]]


			Some key assumptions were made for forecasting these line items from 2023 onwards. Revenue was grown at the mean value of the CapitalIQ analyst projections. COGS (35%), EBITDA (38%), depreciation (4%) and capital expenditure (6%), were either forecasted at a 7-year average percentage of revenue excluding 2020 and 2021 or if more applicable the mean value of CapitalIQ analyst projections. Tax was estimated as a percentage of EBIT and was thereafter forecasted at 20%, being the general forecast consensus.

			The weighted average cost of capital (WACC) is used as the discount rate in the DCF model, as free cash flows to the firm (FCFF) are used to calculate the enterprise value of the firm. The cost of equity (11.8%) was calculated using the capital asset pricing model (CAPM). The risk-free rate (4.084%) was assumed to be the U.S. 10 Year Treasury. The beta (1.3) is the 5-year monthly historical beta of ISRG according to Yahoo Finance. The market return (9.89%) is taken to be the 30-year average return of the NASDAQ, where ISRG is listed. While the 30-year average can be argued to be extensive, a more conservative valued seemed appropriate considering the 17% 5-year AAR and 14.8% 10-year AAR. The cost of debt (0%) was calculated as the company has no interest expense despite the $95 million in debt. This maybe due to ISRG having no debt till 2020 where total debt was reported as $80 million (2020), $87 million (2021) and $95 million (2022).

			Having completed a forecast and calculated the WACC, the DCF method was implemented to arrive at an enterprise value of $24,058,196,080. The terminal value was calculated using a perpetual growth rate of 2%, which is estimated to be in line with US’s future GDP growth rate. After discounting the cash flows using the WACC and arriving at an enterprise value, an equity value of $28,085,096,080 was then estimated. Thereafter, an implied share price of $80.40 was calculated by dividing the equity value by the number of shares outstanding (351 million shares). Based on this valuation and relative to the actual share price of $305.32, ISRG would be viewed as being overvalued.

	== Risks ==		== Risks ==