ISRG Stock Soars After Returning To Pre-Covid Growth Levels

Giant of robotic surgery Intuitive Surgery (ISRG) comfortably beat expectations for the third quarter with case growth of 20% for its da Vinci system, which caused ISRG stock to surge on Wednesday.


Procedure growth is a key metric for Intuitive Surgical. The company sells or leases its robotic surgical system. However, an important part of the turnover is the sale of disposable instruments and accessories. The growth of the processes leads to a growth of these elements.

Since Q3 2019 – at the start of the Covid pandemic – Intuitive Surgical has reported a 16% compound annual growth rate for procedures. The third quarter of 2022 slightly topped that at 20% and ISRG stock rose sharply.

Wall Street called for a more modest growth rate of 14.4%, Bank of America Securities analyst Travis Steed said in a report to clients. Intuitive Surgical “is seeing staffing/supply chain pressures easing and hospitals still prioritizing da Vinci after reviewing budgets,” he said.

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In morning trading on today’s exchange, ISRG stock is up 12.5% ​​near 218. That helped shares outperform its 50-day moving average for the first time in about a month.

ISRG Stock: System Placements Dip

Overall, revenue rose 11% to $1.56 billion, according to FactSet, beating forecasts of $1.51 billion. Intuitive Surgical also reported adjusted earnings of $1.19 per share, flat from a year earlier. But that slightly beat ISRG equity analysts’ forecast of $1.12 per share.

Intuitive Surgical placed just 305 da Vinci systems, down 9%. However, that topped views for 288, according to Bank of America’s Steed. He kept his Buy rating on ISRG stock.

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“We still see Intuitive Surgical as one of the best positioned names in medical technology,” he said.

The company also saw strong growth in sales of disposable instruments and accessories. Revenue from these items increased 15% to $872 million. The increase was primarily due to a 20% growth in case volume, partially offset by negative exchange rates and buying habits.

Further proceedings awaited

For the year, Intuitive Surgical now expects 17% to 18% growth in procedures, up from its previous forecast of 14% to 16.5%, UBS analyst Graham Doyle said in his note to clients. The company also expects operating expenses to increase by only 21% to 23%, compared to previous expectations of 23% to 25%.

“During the conference call, there were also some relatively positive comments on the hospital environment (capital spending), noting that the rest of the world is not yet showing signs of weakness and that the US remains competitive and not necessarily from a macro under pressure to be put on perspective,” said Doyle.

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Doyle kept a Buy rating and price target of 320 on ISRG stock.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.


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