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Intuitive Surgical: Q1 Solid, Procedures Likely to Slow Ddown

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On Apr 21, we issued an updated research report on Sunnyvale-based Intuitive Surgical (ISRG - Free Report) – manufacturer of the da Vinci surgical system (an advanced robot-assisted surgical system) and related instruments and accessories. The company currently carries a Zacks Rank #3 (Hold).

Of the major positives, Intuitive Surgical has had an impressive run in the bourse of late. A glimpse at the recent price performance reveals a favorable return of 27.7% over the past one year, compared with the Zacks classified Medical Instruments sub-industry’s gain of roughly 2%.

Intuitive Surgical reported stellar first-quarter 2017 results earlier this week, crushing the Zacks Consensus Estimate on both the counts, thanks to the growing adoption of the da Vinci system among physicians and overall growth in global procedures. Intuitive Surgical’s da Vinci surgical system enables minimally invasive surgery that helps avoid the trauma associated with open surgery.

Intuitive Surgical continuously introduces technologies for surgical systems. The company also plans to launch an upgrade – da Vinci X – to its flagship Vinci Xi technology. In this regard, management confirmed the submission of documents for CE Mark approval of Vinci X. Furthermore, the company expects availability of this device in Europe by the second quarter of 2017.

On the flipside, the company expects procedure growth rate to slow down a bit outside the U.S. in the coming quarters. The long sale and purchase order cycle of the da Vinci system has added to the woes.

As a result, the company’s recent earnings estimates for the current year have been a tad bit disappointing, with one analyst moving north and one south over the past two months. As a result, the consensus estimate for the stock inched down around 0.1% over the same time frame.

Key Picks

Better-ranked stocks in the broader medical sector include Inogen Inc. (INGN - Free Report) , Hologic, Inc. (HOLX - Free Report) and Sunshine Heart Inc . Notably, all the stocks sport a Zacks Rank #1 (Strong 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%. The stock represents an impressive one-year return of 58.5%.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a stellar one-year return of roughly 15.5%.

Sunshine Heart posted a positive earnings surprise of 58.24% in the last reported quarter. The stock has a stellar EPS growth record (last 3–5 years of actual earnings) of almost 22%.

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