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Intuitive Surgical (ISRG) Q3 Earnings Top Estimates, Down Y/Y

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Intuitive Surgical, Inc. (ISRG - Free Report) reported third-quarter 2020 adjusted earnings per share (EPS) of $2.77, which beat the Zacks Consensus Estimate of $2 by 38.5%. However, the figure declined 19.2% year over year.

The Zacks Rank #4 (Sell) company reported revenues of $1.08 billion, which fell 4.5% from the prior-year quarter. Nonetheless, the top line outpaced the Zacks Consensus Estimate of $964 million.

Segment Details

Instruments & Accessories

Revenues at the segment amounted to $630.6 million, reflecting year-over-year improvement of 4%. This can be attributed to 7% growth in da Vinci procedure volume.

Systems

In the reported quarter, System revenues slumped 20.9% year over year to $267.8 million. In fact, the company shipped 195 da Vinci Surgical Systems in the quarter, down 29.1% from the prior-year quarter.

Services

Services revenues were $179.3 million, down 2.2% from the year-ago quarter.

Outside the United States, revenues totaled $316.6 million, up 1% on a year-over-year basis.

Outside the United States, Intuitive Surgical placed 79 systems in the third quarter compared with 90 in the prior-year quarter. Of these, 39 were in Europe, 15 in Japan and 12 in China.

Intuitive Surgical, Inc. Price, Consensus and EPS Surprise


Intuitive Surgical, Inc. Price, Consensus and EPS Surprise

Intuitive Surgical, Inc. price-consensus-eps-surprise-chart | Intuitive Surgical, Inc. Quote

Margins

Adjusted gross profit in the reported quarter was $756.8 million, down 6.8% year over year. As a percentage of revenues, gross margin in the quarter was 67.2%, down 240 basis points (bps).

Adjusted operating income totaled $402.4 million, down 12.9% year over year. As a percentage of revenues, operating margin in the quarter was 25.1%, down 730 bps.

Outlook

Due to persistent uncertainty surrounding the extent and duration of the pandemic, and the timing of global recovery and economic normalization, the company cannot ascertain the future impact on its operations and financial performance during this time. Consequently, the company has not issued any guidance for 2020.

Wrapping Up

Intuitive Surgical ended the third quarter on a solid note. Moreover, the company witnessed growth in da Vinci procedure volume in the quarter under review. Additionally, in the quarter under review, the company introduced Intuitive Ventures, which is an inaugural $100 million fund committed toward investment in companies that share Intuitive Surgical's focus on advancing positive outcomes in healthcare. Also, overall international sales improved in the quarter.

However, the company witnessed weak performance across its Systems and Services segments in the quarter under review. The company also witnessed contraction in gross and operating margins in the quarter under review. Intense competition in the global MedTech space remains a concern.

Key Picks

Some better-ranked stocks, which are expected to report earnings soon, are Abbott Laboratories (ABT - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and ResMed Inc. (RMD - Free Report) .

The Zacks Consensus Estimate for Abbott 's third-quarter 2020 adjusted EPS is currently pegged at 90 cents. The consensus estimate for third-quarter revenues stands at $8.46 billion. The company, which currently carries a Zacks Rank #2 (Buy), is expected to release results soon. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

IDEXX currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its third-quarter 2020 adjusted EPS is currently pegged at $1.41. The consensus estimate for third-quarter revenues stands at $666.7 million.

The Zacks Consensus Estimate for ResMed's first-quarter fiscal 2021 adjusted EPS is currently pegged at 95 cents. The consensus estimate for revenues stands at $702.4 million. It currently has a Zacks Rank #2.

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