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Intuitive Surgical, Inc. (ISRG) Down 6.1% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Intuitive Surgical, Inc. (ISRG - Free Report) . Shares have lost about 6.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Intuitive Surgical, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Intuitive Surgical Q4 Earnings Beat Estimates, Up Y/Y

Intuitive Surgical, Inc. reported fourth-quarter 2020 adjusted earnings per share of $3.58, which beat the Zacks Consensus Estimate of $3.10 by 15.5%. Moreover, the bottom line improved 2.9% year over year.

For the full-year 2020, the company reported adjusted EPS of $10.16 declined 20.4% from 2019 but surpassed the consensus mark by 4.9%.

Revenue Details

The company reported revenues of $1.33 billion, which rose 4% from the prior-year quarter. The top line also outpaced the Zacks Consensus Estimate of $1.24 billion by 7.3%.

For the full-year 2020, the company reported revenues of $4.36 billion, down 2.7% from 2019. However, the figure beat the Zacks Consensus Estimate by 2.3%.

Segment Details

Instruments & Accessories

Revenues at the segment amounted to $746.9 million, reflecting year-over-year improvement of 11.3%. This can be attributed to 6% growth in da Vinci procedure volume and stocking orders related to the company’s introduction of Extended Use Instruments.

Systems

In the reported quarter, System revenues slumped 11.9% year over year to $267.8 million. In fact, the company shipped 326 da Vinci Surgical Systems in the quarter, compared to 336 systems in the prior-year quarter.

Services

Services revenues were $215.4 million, up 13.2% from the year-ago quarter.

Outside the United States, Intuitive Surgical placed 130 systems in the fourth quarter compared with 140 in the prior-year quarter. Of these, 54 were in Europe, 22 in Japan and 13 in China.

Margins

Adjusted gross profit in the reported quarter was $926.8 million, up 0.5% year over year. As a percentage of revenues, gross margin in the quarter was 67.4%, down 270 basis points (bps).

Adjusted operating income totaled $534.6 million, up 5.7% year over year. As a percentage of revenues, operating margin in the quarter was 31.3%, up 20 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 refrained from issuing any guidance for 2021.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -10.47% due to these changes.

VGM Scores

Currently, Intuitive Surgical, Inc. has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Intuitive Surgical, Inc. has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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