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Intuitive Surgical (ISRG - Analyst Report)
is a Zacks #1 Rank (Strong Buy) after posting eleven straight positive earnings surprises and receiving higher estimates
for 2012 and 2013.
Intuitive Surgical, Inc. designs, manufactures, and markets da
Vinci surgical systems for various surgical procedures, including
urologic, gynecologic, cardiothoracic, general, and head and neck
surgeries. Its da Vinci surgical system consists of a surgeon's
console or consoles, a patient-side cart, a 3-D vision system,
Firefly fluorescence imaging product, da Vinci skills simulator,
and proprietary wristed' instruments. The company was founded in
1995 and is headquartered in Sunnyvale, California.
ISRG Tops Expectations in Eleven Straight Quarters
Intuitive Surgical has beaten the Zacks Consensus Estimate in each
of the last eleven quarters. Over the last six quarters, the
company has beaten the bottom line number by an average of $0.30
or about 12%. On the top line, the company has beaten the Zacks
Consensus Estimate by an average of $12 million per quarter or
Over the course of the last five earnings reports, Wall Street has
reacted mostly positive to the positive earnings surprises. On
average, the stock has moved higher by 5% following earnings.
Intuitive Surgical Most Recent Earnings Report
On January 19, 2012 the company reported revenue of $497 million
roughly $13 million more than the Zacks Consensus Estimate and
higher than the $389 million reported in the year ago period. EPS
of $3.75 was $0.41 ahead of the estimate or a 12% beat. Following
the report, the stock moved lower by 5%.
Earnings Estimates Bumped Up
Following the most recent earnings report, analysts bumped up
their earnings estimates for 2012. The Zacks Consensus Estimate
for 2012 EPS moved from $14.07 in December 2011 to the current
level of $14.53. The 2013 estimate was also bumped higher
following the most
recent earnings release, moving from $15.89 in December to the
current level of $16.85.
Next Earnings Report Coming Soon
Intuitive Surgical reports earnings on April 17 after the close of
the market. The Zacks Consensus Estimate is calling for $466
million in revenue and $3.14 of EPS. In the year ago period, the
company reported revenue of $388 million and $2.59 in EPS and the
stock moved higher by about 2% following the release.
When a stock has a steady history of beating the estimate and
raising estimates for the future, a premium valuation is generally
also present. That is the case for ISRG. A 43x trailing PE
multiple and a 37x forward PE multiple are both well above an
industry average that is just below 15x for both multiples. Price
to book of almost 8x is also well above the industry average of
2.3x and price to sales is higher than the industry average.
Consistency and leadership comes at a price.
When we look at the price and consensus chart for Intuitive
Surgical, we see the stock following the earnings estimates
throughout much of 2010 and 2011. 2012 and 2013 are seeing
estimates rise significantly above past expectations as sales of
the da Vinci system increase and become the mainstream alternative
in the health care world. When aggressive growth investors see the
estimates well above the stock price, it is generally a sign that
the stock is undervalued. Intuitive Surgical is a Zacks #1 Rank
Brian Bolan is the Aggressive Growth Stock Strategist
Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor
service You can follow him at twitter.com/bbolan1