Back to top

Analyst Blog

Intuitive Surgical (ISRG - Analyst Report) reported first quarter 2013 earnings per share of $4.56 beating the Zacks Consensus Estimate of $4.00 while surpassing the year-ago results of $3.50. Net income was $188.9 million (or $4.56 per share), up 31.6% year over year.


Intuitive Surgical reported revenues of $611.4 million for the first quarter, up 23% year over year. The results beat the Zacks Consensus Estimate of $581 million.    

On a segment basis, the company reported revenues from instruments and accessories of $261.1 million, up 26% year over year, in the first quarter. The growth was driven by a 18% year-over-year increase in da Vinci surgical procedures. The growth in procedures was 20% upon exclusion of the effect of the leap year. Growth in international urology, U.S. gynecology and general surgery procedures was partly offset by a drop in prostatectomy procedures in the U.S.

Revenues from sales of systems were $255.9 million, up 24% year over year. The increase in systems revenue was due to higher sales of 164 da Vinci Systems compared with 140 systems in the year-ago quarter. Service revenue was $94.4 million, up 17% year over year, primarily due to growth in the base of da Vinci Surgical systems.


Intuitive Surgical enjoyed a gross margin of 71% in the reported quarter, down from 71.9% the year-ago quarter. The company reported operating expenses of $183.1 million in the quarter, up about 12.6% year over year. The increase was due to growth in selling, general and administrative expense (up 13.9%) and research and development expenditure (up 8.3%).

Operating income was $251 million, or about 41% of sales, in the reported quarter compared with $193 million, or 39% of sales, in the prior-year quarter.

Balance Sheet

Intuitive Surgical exited 2013 with cash, cash equivalents and investments of $3,116 million, up 6.7 year over year.


Intuitive Surgical modified its procedure growth rate to the lower end of 20% to 23% from 20% to 23% earlier. The company expects revenues to grow at the higher end of 16% to 19% for 2013 from 16% to 19% earlier. Operating income continues to be forecast in a band of 38% to 39% of sales for 2013.

We expect a number of procedures that are currently completed either in an open surgical manner or with laparoscopy to be eventually replaced by da Vinci surgery, as robotic surgery becomes the standard of care in many instances. The company enjoys a virtual monopoly in robotic surgery with little competition.

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. However, we believe that until the global economy recovers fully, the stock may come under pressure as investors ponder whether lingering macro economic uncertainty weakens hospitals’ commitment to buy high-cost robotic systems.

The pace of adoption of robotic surgery may therefore be lumpy and growth in usage require acceptance from patients and training to medical practitioners. Intuitive competes with Accuray Inc. (ARAY - Analyst Report) in certain niches.

Our rating factors in the attractive growth prospects of the company, given da Vinci system’s leading status as an enabler of robotic minimally invasive surgery. The installed base of the company continues to grow as hospitals feel compelled to upgrade their technology.

The stock carries a Zacks Rank #3 (Hold). Align Technology Inc. (ALGN - Analyst Report) and The Cooper Companies Inc. (COO - Analyst Report) carry Zacks Rank #2 (Buy) and are expected to do well.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
PLANAR SYST… PLNR 4.44 +5.21%
BITAUTO HOL… BITA 81.71 +5.12%
CTPARTNERS… CTP 16.66 +4.26%
CHINA BIOLO… CBPO 47.91 +3.30%
MALLINCKROD… MNK 72.94 +2.85%