Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Intuitive Surgical, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 14.5% to 9.7% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 61, DPO 27, DIO 173). At a 7.8% WACC with mid-year discounting, the terminal value (87% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 17.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $253.29 per share, suggesting ISRG is overvalued by 46.3% at the current price of $471.94.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,983 | 3,397 | 3,884 | 4,459 | 4,890 | 5,012 |
| (−) Net Interest | 230 | 262 | 300 | 345 | 378 | 387 |
| (+) D&A | 720 | 872 | 1,020 | 1,097 | 1,208 | 1,238 |
| EBITDA | 3,934 | 4,532 | 5,204 | 5,901 | 6,476 | 6,638 |
| (−) Tax | 345 | 393 | 449 | 516 | 566 | — |
| (−) CapEx | 1,114 | 1,269 | 1,451 | 1,666 | 1,827 | — |
| (−) ΔWC | 219 | 476 | 561 | 662 | 495 | — |
| Free Cash Flow (FCF) | 2,255 | 2,393 | 2,743 | 3,057 | 3,588 | — |
| Peers' EBITDA Multiple | 17.0x | |||||
| Terminal Value | 112,705 | |||||
| WACC / Discount Rate | 7.83% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,172 | 2,137 | 2,272 | 2,348 | 2,556 | 77,313 |
| Enterprise Value | 88,798 | |||||
| Projection Period | 11,485 | 12.9% | ||||
| Terminal Value | 77,313 | 87.1% | ||||
| (−) Current Net Debt | (3,065) | |||||
| Equity Value | 91,863 | |||||
| (÷) Outstanding Shares | 363M | |||||
| Fair Price | $253 | -46.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 13.0x | 15.0x | 17.0x | 19.0x | 21.0x |
|---|---|---|---|---|---|
| 5.8% | $221 | $248 | $276 | $303 | $331 |
| 6.8% | $212 | $238 | $264 | $291 | $317 |
| 7.8% | $203 | $228 | $253 | $278 | $304 |
| 8.8% | $195 | $219 | $243 | $267 | $291 |
| 9.8% | $187 | $210 | $233 | $256 | $279 |
Current price: $471.94. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.