Intuitive Surgical to Outperform - Analyst Blog
January 30 2013 - 9:20AM
Zacks
On Jan 29, 2013, we retained
Intuitive Surgical (ISRG), the pioneer in
minimally invasive robotic surgery, at Outperform following its
strong results for the fourth quarter 2012. The company has
delivered positive earnings and sales surprises in each of the last
four quarters.
Why the
Retention?
Intuitive Surgical announced fourth
quarter 2012 results on Jan 22. Fourth quarter earnings per share
came in at $4.25 well above the Zacks Consensus Estimate of $4.03.
Intuitive Surgical reported revenues of $609.3 million for the
fourth quarter, up 22.6% year over year and surpassing the Zacks
Consensus Estimate of $584 million.
Over the last 30 days, the Zacks
Consensus Estimate for 2013 has moved up by 10 cents to $17.60.
Moreover, the Zacks Consensus Estimate for 2014 has risen 6 cents
to $20.48 during the same period.
The Intuitive Surgical growth story
remains compelling. The company issued favorable guidance for 2013.
Intuitive Surgical expects procedure count to increase by 20% to
23% for 2013 propelled by general surgery and gynecology procedures
in the domestic market and overseas prostatectomy procedures. The
company expects revenues to grow in the range of 16% to 19% for
2013 with higher sales in the fourth quarter than in the first
quarter. Operating income is expected in a band of 38% to 39% of
sales for 2013.
Intuitive Surgical’s recurring
revenue stream continues to be robust and provides a shield against
cyclicality of revenues, arising from the sale of discretionary
capital equipment to hospitals. Recurring revenues increased 27%
year over year in the fourth quarter 2012 and constituted 57% of
revenues.
However, we believe that until the
global economy recovers, the stock may come under pressure as
investors ponder whether lingering macro economic uncertainty will
weaken hospitals’ commitment to buy high-cost robotic systems. In
the meantime, the installed base of the company continues to grow
as hospitals feel compelled to upgrade their technology. Intuitive
competes with Accuray Incorporated (ARAY) in
certain niches.
Other Stocks to
Consider
Other stocks which are expected to
do well include Cantel Medical Corp. (CMN) and
Cyberonics Inc. (CYBX). Both are rated at Zacks
Rank #1 (Strong Buy).
ACCURAY INC (ARAY): Free Stock Analysis Report
CANTEL MED CORP (CMN): Free Stock Analysis Report
CYBERONICS INC (CYBX): Free Stock Analysis Report
INTUITIVE SURG (ISRG): Free Stock Analysis Report
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