Intuitive Surgical Inc. (ISRG - Free Report) is one of the top-performing stocks in the MedTech space. Growing adoption of the company’s robot-based da Vinci surgical system and increasing procedure volumes are key catalysts.
The stock has rallied 52.9% in a year’s time, against the industry’s decline of 1.5% and the S&P 500 index’s return of 13.5%. The stock has a market cap of $51.51 billion.
Let’s find out whether the company can maintain the positive trend.
Robot-based da Vinci Unit Driving Growth
The growing prevalence of minimally-invasive robot-assisted surgeries, self-automated home-based care, use of IT for quick and improved patient care and shift of the payment system to a value-based model indicate higher adoption of Artificial Intelligence in the MedTech space.
Intuitive Surgical’s flagship da Vinci surgical system is powered by robotic technology. The platform has bolstered the company’s foothold in the markets of Cardiac Surgery, Colorectal Surgery, General Surgery, Gynecologic Surgery, Head & Neck Surgery, Thoracic Surgery and Urologic Surgery. The da Vinci System has provided minimally invasive surgery to more than 3 million patients worldwide.
The company launched an upgrade to its flagship Vinci Xi technology. Notably, the Xi suite is designed to seamlessly integrate future innovations such as advanced instrumentation, surgical skills simulation, software upgrades and other advancements into one dynamic platform. The company can now ship Xi Single-Site, Xi 30-millimeter stapler and Firefly to several countries.
Minimally invasive surgery is becoming increasingly popular as it helps patients recover faster, thereby reducing hospitalization costs. Notably, the minimally invasive surgical instruments market is projected to reach a worth of $18.14 billion by 2021, at a CAGR of 10.2% (per Markets & Markets).
Although high price of the da Vinci system may hinder widespread adoption, we believe that the overwhelming benefits of minimally invasive surgery will compel surgeons and patients to use the system. This will drive the company’s system sales and improve top-line growth in the long run.
In the first quarter of 2018, da Vinci procedures grew approximately 15% year over year. Intuitive Surgical replaced 185 da Vinci surgical systems, up from a 133 in the first quarter of 2017. The company’s installed base grew 13% from the year-ago quarter.
For 2018, the company has strong opportunities in the U.S. general surgery market, particularly driven by procedures for hernia repair and colorectal surgery. Internationally, the company has significant opportunities in Japan, South Korea and China.
Zacks Rank & Estimate Revision
In the past 60 days, the Zacks Consensus Estimate for earnings per share increased 3.8% to $2.43 for the current quarter.
Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), which indicates at possibilities of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company delivered an average earnings surprise of 19.7% in the trailing four quarters. Also, the expected long-term earnings growth of 12.1% looks promising.
Intuitive Surgical, Inc. Price and Consensus
Other Key Picks
A few other top-ranked stocks in the broader medical space are Abiomed, Inc (ABMD - Free Report) , Genomic Health Inc (GHDX - Free Report) and Varian Medical Systems, Inc (VAR - Free Report) .
Abiomed has a long-term earnings growth rate of 27%. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Genomic Health has an expected earnings growth rate of 187.5% and a Zacks Rank #1.
Varian Medical has a projected long-term earnings growth rate of 8%. The stock carries a Zacks Rank #2.
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