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Intuitive Surgical (ISRG) Q2 Earnings: What's in Store?

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Intuitive Surgical Inc (ISRG - Free Report) is set to report second-quarter 2016 results on Jul 19. Last quarter, the company reported earnings of $3.67 per share, which exceeded the Zacks Consensus Estimate by 21 cents.

We note that on an average, Intuitive Surgical posted a positive earnings surprise of 18.24% over the last four quarters.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

We believe that the growing adoption of the Da Vinci system among physicians for general surgery (hernia repair, colorectal) procedures is a key catalyst because it is increasing procedural volumes, especially outside the U.S.

Intuitive Surgical continues to focus on developing new products that enhance the capabilities of the da-Vinci system. The newly launched intra-operative Table Motion has already received strong customer feedback on its utility, particularly in general surgery.

INTUITIVE SURG Price and EPS Surprise

INTUITIVE SURG Price and EPS Surprise | INTUITIVE SURG Quote

Apart from the growing adoption of existing products and expanding portfolio, suspension of the medical device tax is likely to boost gross margin at least in the near term.

However, unfavorable currency fluctuations, increasing regulatory headwinds and low capital investment in hospitals are expected to be major dampeners.

Earnings Whispers
    
Our proven model does not conclusively show that Intuitive Surgical is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Intuitive Surgical currently has an Earnings ESP of +2.14%. This is because the Most Accurate estimate stands at $4.30 while the Zacks Consensus Estimate is $4.21.

Zacks Rank: Intuitive Surgical carries a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revision.

Stocks to Consider

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

CytRx Corporation with an Earnings ESP of +15.00% and a Zacks Rank #1.

Innoviva Inc. (INVA - Free Report) with an Earnings ESP of +25.00% and a Zacks Rank #1.

WellCare Health Plans Inc. with an Earnings ESP of +0.73% and a Zacks Rank #1.

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