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Intuitive Surgical (ISRG) Well Poised on Procedural Business

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On Aug 29, we issued an updated research report on Sunnyvale-based Intuitive Surgical Inc. (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).

Among 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 43.9% over the past year, comparing favorably with the industry’s increase of 4.1%. The company has a solid track characterized by consecutive earnings beat in the trailing four quarters.

In recent times, Intuitive Surgical reported stellar performance mainly due to the growing adoption of the da Vinci system among physicians and overall growth in global procedures. The da Vinci surgical system enables minimally invasive surgery that helps avoid the trauma associated with open surgery. Performance was also aided by growing volumes, courtesy to general surgery, oncology, urology and gynecology procedures.

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 end of 2017. In the long haul, extensive expenditure on product pipeline and expansion in international markets like Europe should drive growth for the company.

On the flipside, the company expects procedure growth rate to slow down a bit outside the United States in the coming quarters. The long sale and purchase order cycle of the da Vinci system has added to the woes. Also, expenses on research and development (R&D) increased significantly in the first half of 2017, reflecting high spending on advanced imaging, advanced instrumentation and next-generation robotics.

Key Picks

A few better-ranked medical stocks are IDEXX Laboratories, Inc. (IDXX - Free Report) , Lantheus Holdings, Inc. (LNTH - Free Report) and Edwards Lifesciences Corporation (EW - Free Report) . Edwards Lifesciences sports a Zacks Rank #1 (Strong Buy), while Lantheus Holdings and IDEXX Laboratories carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has gained around 6.2% over the last six months.

Lantheus Holdings has a long-term expected earnings growth rate of 12.5%. The stock has surged 34.9% over the last six months.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. The stock has rallied roughly 19.1% over the last six months.

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