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Intuitive Surgical Hits 52-Week High on Multiple Positives

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Shares of leading provider of robotic-assisted surgery, Intuitive Surgical, Inc. (ISRG - Free Report) rallied to a new 52-week high of $770.28 on Mar 28, closing a tad lower at $764.47. This represents a strong year-to-date return of approximately 20.5%, better than the S&P 500’s 5.1%.

For the majority of the last three months, the company’s share price outperformed the Zacks categorized Medical Instruments sub-industry. The stock rallied 20.5%, outshining the sub-industry’s gain of 9.1%. Notably, the stock has a market cap of $28.18 billion.

Taking the stable performance of the stock into consideration, we expect Intuitive Surgical to scale higher in the coming quarters. The company’s positive long-term growth of 11.03% also holds promise.

The stock currently has a Zacks Rank #3 (Hold).

Growth Catalysts

Strength in Key Areas of Growth:  In the last reported quarter, Intuitive Surgical announced that it aims to accelerate its investment stature in the core business areas of growth (by almost $80 million). We believe this has been a key catalyst for the stock’s favorable price performance. Furthermore, the company generates majority of its revenues from domestic markets, leaving scope for international growth over the long term. Per management, adjusted operating expenses are expected between 15% and 18% of net revenues for 2017.

Solid da Vinci System Performance: Growing adoption of Intuitive Surgical’s da Vinci surgical system among physicians of general surgery, oncology, urology and gynecology procedures is a key growth factor. Intuitive Surgical’s da Vinci surgical system enables minimally-invasive surgery that helps avoid the trauma associated with open surgery.

Minimally invasive surgery is becoming increasingly popular as it helps patients recover faster, thereby reducing hospitalization costs. Meanwhile, the global minimally invasive surgical instruments market is projected to reach a worth of $18.14 billion by 2021, growing at a CAGR of 10.2% (Markets & Markets).

In the last reported quarter, worldwide da Vinci procedure volumes grew approximately 15% year over year, courtesy of a significant rise in U.S. general surgery and worldwide urologic procedures. Notably, the company shipped 163 da Vinci surgical systems, up from 158 in the fourth quarter of 2015.

Impressive Fourth-quarter Numbers:Intuitive Surgical reported stellar fourth-quarter 2016 results, crushing the Zacks Consensus Estimate on both the counts. Revenues increased 11.9% year over year to $756.9 million, driven by higher procedural volume and growth across all business segments.

Analyzing the growth of revenues across the several business segments, instruments and accessories revenues grew 18.6% to $386.3 million in the quarter driven by a higher number of procedures and increased sales of stapling and vessel sealing products. System sales increased 2.3% to $235.9 million buoyed by higher revenues from operating lease activities. Coming to Service, the company registered revenues of $134.7 million, up 12.1% on a year-over-year basis on growth in the installed base of da Vinci systems.

Stable Estimate Revision Trend: Intuitive Surgical’s estimate revision trend looks stable at the moment. The estimates for the current quarter and full year are pegged at $3.97 and $19.70 per share, respectively, for the last two months.

Stocks to Consider

Better-ranked stocks in the broader medical sector include Inogen Inc. (INGN - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Fluidigm Corporation . Notably, Inogen and IDEXX Laboratories sport a Zacks Rank #1 (Strong Buy) while Fluidigm carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Inogen has a long-term expected earnings growth rate of 17.50%. Notably, the stock represents an impressive one-year return of 83.24%.

IDEXX Laboratories. has a long-term expected earnings growth rate of 15.04%. Additionally, the stock represents an impressive one-year return of 97.88%.

Fluidigm has a long-term expected earnings growth rate of 25%. The stock posted a positive earnings surprise of 1.6% in the last reported quarter.

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