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Here's Why You Should Retain Intuitive Surgical (ISRG) Now
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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, sluggishness in the Systems segment raises concern.
Shares the company have gained 56.3% compared with the industry’s growth of 36.7% in a year’s time. Meanwhile, the S&P 500 Index has rallied 53.8% in the same time frame.
The company, with a market capitalization of $90.67 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 8.5% over the next five years. Moreover, it has beat estimates in each of the trailing four quarters, the average surprise being 71.6%.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
Intuitive Surgical witnessed weak performance in its Systems segment in fourth-quarter 2020. 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.
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.
In fourth-quarter 2020 and the full year 2020, da Vinci procedures grew 6% and 1% globally, respectively, resulting in about 1.25 million procedures in 2020 despite the COVID-19 pandemic induced challenges. On an overall basis, the recovery of procedures happened gradually during third-quarter 2020 and reached to approximately 90% of pre-COVID-19 levels by the end of that quarter. Moreover, Intuitive Surgical placed 5,989 da Vinci surgical systems in the fourth quarter, with the installed base growing 7% year over year.
The company is gradually gaining prominence in markets outside the United States. In fourth-quarter 2020, the company witnessed solid procedure growth in Asia. 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.
Intuitive Surgical’s business model ensures that it continues to generate revenues from initial capital sales of da Vinci Surgical Systems, and subsequent sales of instruments, accessories and services. Recurring revenues, as portion of total revenues, continue to grow at a much higher rate compared with system sales. This ensures a steady stream of income, even in testing times.
Which Way Are Estimates Headed?
For 2021, the Zacks Consensus Estimate for revenues is pegged at $4.91 billion, indicating growth of 12.8% from the prior-year quarter. The same for earnings stands at $12.21 per share, suggesting an improvement of 20.2% from the year-ago reported figure.
Hologic’s long-term earnings growth rate is expected at 15.4%.
Hill-Rom Holdings’ long-term earnings growth rate is estimated at 7.3%.
Cantel Medical’s long-term earnings growth rate is estimated at 19%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Here's Why You Should Retain Intuitive Surgical (ISRG) Now
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, sluggishness in the Systems segment raises concern.
Shares the company have gained 56.3% compared with the industry’s growth of 36.7% in a year’s time. Meanwhile, the S&P 500 Index has rallied 53.8% in the same time frame.
The company, with a market capitalization of $90.67 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 8.5% over the next five years. Moreover, it has beat estimates in each of the trailing four quarters, the average surprise being 71.6%.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
Intuitive Surgical witnessed weak performance in its Systems segment in fourth-quarter 2020. 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.
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.
In fourth-quarter 2020 and the full year 2020, da Vinci procedures grew 6% and 1% globally, respectively, resulting in about 1.25 million procedures in 2020 despite the COVID-19 pandemic induced challenges. On an overall basis, the recovery of procedures happened gradually during third-quarter 2020 and reached to approximately 90% of pre-COVID-19 levels by the end of that quarter. Moreover, Intuitive Surgical placed 5,989 da Vinci surgical systems in the fourth quarter, with the installed base growing 7% year over year.
The company is gradually gaining prominence in markets outside the United States. In fourth-quarter 2020, the company witnessed solid procedure growth in Asia. 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.
Intuitive Surgical’s business model ensures that it continues to generate revenues from initial capital sales of da Vinci Surgical Systems, and subsequent sales of instruments, accessories and services. Recurring revenues, as portion of total revenues, continue to grow at a much higher rate compared with system sales. This ensures a steady stream of income, even in testing times.
Which Way Are Estimates Headed?
For 2021, the Zacks Consensus Estimate for revenues is pegged at $4.91 billion, indicating growth of 12.8% from the prior-year quarter. The same for earnings stands at $12.21 per share, suggesting an improvement of 20.2% from the year-ago reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Hologic, Inc. (HOLX - Free Report) , Hill-Rom Holdings, Inc. and Cantel Medical Corp. , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic’s long-term earnings growth rate is expected at 15.4%.
Hill-Rom Holdings’ long-term earnings growth rate is estimated at 7.3%.
Cantel Medical’s long-term earnings growth rate is estimated at 19%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>