A month has gone by since the last earnings report for Intuitive Surgical, Inc. (ISRG Quick QuoteISRG - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Intuitive Surgical, Inc. due for a pullback? 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, Procedures Robust

Intuitive Surgical reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.60, which beat the Zacks Consensus Estimate of $1.47 by 8.8%. The bottom line improved 30% year over year.

GAAP EPS in the quarter was $1.69, up 85.7% from the year-ago quarter’s level. The significant increase in GAAP EPS was due to the inclusion of certain income tax benefits worth $67 million and the receipt of certain tax assets worth $92 million in GAAP net income.

Revenue Details

The company reported revenues of $1.93 billion, up 17% from the prior-year quarter’s recorded number. Growth in the da Vinci procedure volume contributed to the improvement and gain from systems placement. On a constant currency (cc) basis, revenues were up 17% year over year. The top line also beat the Zacks Consensus Estimate by 3.2%.

Segmental Details

Instruments & Accessories

Revenues from this segment totaled $1.14 billion, indicating a year-over-year improvement of 21.6%. This can be attributed to the da Vinci procedure’s 21% volume growth. The sales growth reflects an improvement in the da Vinci procedure volume and higher pricing.

Systems

This segment’s revenues totaled $480.2 million, up 15.6% year over year. Intuitive Surgical shipped 415 da Vinci Surgical Systems compared with 369 in the prior-year quarter. The company placed 209 systems in the United States compared with 181 in the year-ago period.

Services

Revenues from this segment amounted to $304.4 million, up 3.9% from the year-ago quarter’s level.

Margins

Adjusted gross profit was $1.31 billion, up 16.1% year over year. As a percentage of revenues, the gross margin was 68%, down approximately 20 bps from the prior-year quarter’s figure.

Selling, general and administrative expenses totaled $567.1 million, up 14.7% year over year.

Research and development expenses totaled $260.1 million, up 4.3% on a year-over-year basis.

Adjusted operating income totaled $621 million, up 17.2% year over year. The figure was higher than our estimates of $617 million. As a percentage of revenues, the operating margin was 35.8%, up approximately 20 bps from the prior-year quarter’s figure.

Financial Position

Intuitive Surgical exited the fourth quarter with cash, cash equivalents and investments of $7.34 billion compared with $7.52 billion in the previous quarter.

Total assets increased to $15.4 billion from $14.7 billion in the prior quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Intuitive Surgical, Inc. has a subpar Growth Score of D, however its Momentum Score is doing a bit better 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 F. 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 #4 (Sell). We expect a below average return from the stock in the next few months.