Intuitive Surgical, Inc. (ISRG - Free Report) is well-poised for growth on improving adoption of da Vinci Surgical System, strong international presence and robust recurring revenue base. However, increase in production costs remains a concern.
Shares the company have gained 63.9% compared with the industry’s growth of 21% in a year’s time. Meanwhile, the S&P 500 Index has rallied 38.2% in the same time frame.
The company, with a market capitalization of $113.56 billion, designs, manufactures and markets the da Vinci surgical system and related instruments and accessories. Notably, the da Vinci surgical system is an advanced robot-assisted surgical system. It anticipates earnings to improve 9.4% over the next five years. It has beat estimates in each of the trailing four quarters, the average surprise being 78.8%.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
The COVID-19 pandemic adversely affected global supplies of semiconductors and other materials utilized in Intuitive Surgical’s products. Although the company has been making every effort to secure supply required to ensure fulfilment of consumer demand, global shortages might lead to higher production costs or delay in production.
What’s Favoring the Stock?
Intuitive Surgical’s robot-based da Vinci surgical system enables minimally-invasive surgery, which reduces risks associated with open surgery. The company continues to gain from this system, which in turn bolsters overall performance.
On an overall basis, the recovery of procedures happened gradually during third-quarter 2020 and attained approximately 90% of pre-COVID-19 levels by the end of that quarter. In the first quarter of 2021, da Vinci procedures grew 16%. Intuitive Surgical placed 6,142 da Vinci surgical systems in the first quarter, with the installed base growing 8% year over year.
With respect to digital capabilities, the company’s My Intuitive, which is a mobile app enabling surgeons to manage their da Vinci experience, log into da Vinci systems, manage their training and view their operative data from the palm of their hand, has been helping amid this public health crisis.
The company’s Intuitive telepresence program supported 45% of all case observations in first-quarter 2021, up from less than 5% in the prior year — a substantial achievement that was accelerated by the pandemic. This, in turn, lowered the costs of the team at Intuitive Surgical, while boosting convenience for its customers. On a year-over-year basis, surgical stimulation usage increased around 46%, thereby validating the strength of digital tools.
The company is gradually gaining prominence in markets outside the United States. Outside the United States, revenues totaled $444.6 million, up 39.8% on a year-over-year basis. Outside the United States, the company placed 108 systems in the first quarter compared with 55 in the prior-year quarter. Of these, 59 were in Europe, eight in Japan and 23 in China.
Estimates Trend
Intuitive Surgical has been witnessing an upward estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved north by 10.3% to $13.58.
The Zacks Consensus Estimate for second-quarter 2021 revenues is pegged at $1.28 billion, suggesting growth of 50.8% from the year-ago reported number.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , Envista Holdings Corporation (NVST - Free Report) and Align Technology, Inc. (ALGN - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein’s long-term earnings growth rate is estimated at 11.2%.
Envista Holdings’ long-term earnings growth rate is estimated at 26.4%.
Align Technology’s long-term earnings growth rate is projected at 23.2%.
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Intuitive Surgical, Inc. (ISRG - Free Report) is well-poised for growth on improving adoption of da Vinci Surgical System, strong international presence and robust recurring revenue base. However, increase in production costs remains a concern.
Shares the company have gained 63.9% compared with the industry’s growth of 21% in a year’s time. Meanwhile, the S&P 500 Index has rallied 38.2% in the same time frame.
The company, with a market capitalization of $113.56 billion, designs, manufactures and markets the da Vinci surgical system and related instruments and accessories. Notably, the da Vinci surgical system is an advanced robot-assisted surgical system. It anticipates earnings to improve 9.4% over the next five years. It has beat estimates in each of the trailing four quarters, the average surprise being 78.8%.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
The COVID-19 pandemic adversely affected global supplies of semiconductors and other materials utilized in Intuitive Surgical’s products. Although the company has been making every effort to secure supply required to ensure fulfilment of consumer demand, global shortages might lead to higher production costs or delay in production.
What’s Favoring the Stock?
Intuitive Surgical’s robot-based da Vinci surgical system enables minimally-invasive surgery, which reduces risks associated with open surgery. The company continues to gain from this system, which in turn bolsters overall performance.
On an overall basis, the recovery of procedures happened gradually during third-quarter 2020 and attained approximately 90% of pre-COVID-19 levels by the end of that quarter. In the first quarter of 2021, da Vinci procedures grew 16%. Intuitive Surgical placed 6,142 da Vinci surgical systems in the first quarter, with the installed base growing 8% year over year.
With respect to digital capabilities, the company’s My Intuitive, which is a mobile app enabling surgeons to manage their da Vinci experience, log into da Vinci systems, manage their training and view their operative data from the palm of their hand, has been helping amid this public health crisis.
The company’s Intuitive telepresence program supported 45% of all case observations in first-quarter 2021, up from less than 5% in the prior year — a substantial achievement that was accelerated by the pandemic. This, in turn, lowered the costs of the team at Intuitive Surgical, while boosting convenience for its customers. On a year-over-year basis, surgical stimulation usage increased around 46%, thereby validating the strength of digital tools.
The company is gradually gaining prominence in markets outside the United States. Outside the United States, revenues totaled $444.6 million, up 39.8% on a year-over-year basis. Outside the United States, the company placed 108 systems in the first quarter compared with 55 in the prior-year quarter. Of these, 59 were in Europe, eight in Japan and 23 in China.
Estimates Trend
Intuitive Surgical has been witnessing an upward estimate revision trend for 2021. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved north by 10.3% to $13.58.
The Zacks Consensus Estimate for second-quarter 2021 revenues is pegged at $1.28 billion, suggesting growth of 50.8% from the year-ago reported number.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Henry Schein, Inc. (HSIC - Free Report) , Envista Holdings Corporation (NVST - Free Report) and Align Technology, Inc. (ALGN - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein’s long-term earnings growth rate is estimated at 11.2%.
Envista Holdings’ long-term earnings growth rate is estimated at 26.4%.
Align Technology’s long-term earnings growth rate is projected at 23.2%.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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