ISRG Stock Rises After Returning to Pre-Covid Growth Levels

Robotic surgery giant Intuitive Surgery (ISRG) easily surpassed third-quarter expectations with 20% procedural growth for the da Vinci system, leading ISRG stock higher on Wednesday.




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Procedural growth is an important metric for Intuitive Surgery. The company sells or leases its robotic surgery system. But an important component of his income is the sale of one-off instruments and accessories. Growth in procedures leads to growth in these items.

Since the third quarter of 2019 – at the start of the Covid pandemic – Intuitive Surgical has reported a 16% compound annual growth rate for procedures. The third quarter of 2022 easily surpassed 20% and ISRG stock rose.

Bank of America Securities analyst Travis Steed said in a report to clients that Wall Street is demanding a more modest 14.4% growth rate. “We are seeing staff/supply chain pressures relax and hospitals are still prioritizing da Vinci after re-examining budgets,” Intuitive Surgical said.

ISRG’s stock rose 12.5% ​​close to 218 in today’s morning trading on the stock market. This helped the shares surpass their 50-day moving averages for the first time in about a month.

ISRG Stock: System Placements Drop

Total revenue rose 11% to $1.56 billion, beating estimates of $1.51 billion, according to FactSet. Intuitive Surgical also reported adjusted year-over-year adjusted earnings of $1.19 per share. However, it easily beat ISRG stock analysts’ estimate of $1.12 per share.

Intuitive Surgical installed only 305 da Vinci systems, down 9%. However, according to Bank of America’s Steed, it reached the highest number of views for 288. Maintained its buy rating on ISRG stock.

“We still see Intuitive Surgery as one of the best positioned names in medtech,” he said.

The company also reported strong growth in sales of one-off instruments and accessories. Revenue from these items increased 15% to $872 million. The increase was mainly driven by 20% growth in procedural volume, partially offset by exchange rate headwinds and buying patterns.

Further Procedures Awaited

UBS analyst Graham Doyle told clients in a note that he expects procedural growth of 17-18% for this year, more than Intuitive Surgical’s previous forecast of 14%-16.5%. The company also expects operating expenses to grow by 21%-23%. previous expectations 23% – 25%.

“He also made relatively positive comments on the hospital (capital expenditures) environment during the conference call, noting that the rest of the world has yet to see any signs of weakness, and that the United States remains competitive rather than necessarily suppressed from a macro perspective,” Doyle said.

Doyle maintains a buy rating for ISRG stock and a price target of 320.

Follow Allison Gatlin on Twitter at: @IBD_AGatlin.

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