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Intuitive Surgical (ISRG) Beats on Q2 Earnings & Revenues

Zacks Equity Research
Updated

Intuitive Surgical Inc. ISRG posted adjusted earnings of $5.05 per share in the second quarter of 2017, crushing the Zacks Consensus Estimate of $4.86 on stellar revenue growth. Also, the figure improved 3.9% on a year-over-year basis. Interestingly, in the last four quarters, the company beat estimates at an average of 11.4%.

Revenues increased 12.8% year over year to $756.2 million, driven by growth in recurring instrument, accessory and service and systems revenue. Revenues also beat the Zacks Consensus Estimate of $726 million.

Following the results, share price was up 0.5% to close at $971.73. Also, shares of Intuitive Surgical have returned 53.23% year to date, outperforming the industry’s gain of 20.84%.

Business Highlights

Intuitive Surgical posted solid numbers in the quarter under review, courtesy of rising customer adoption of procedures and growth in system placements.

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Worldwide da Vinci procedure volumes grew approximately 16% year over year. The increase can be attributed to stellar performances in the U.S. general surgery and worldwide urologic procedures. Notably, the company shipped 166 da Vinci surgical systems, up from 130 in the second quarter of 2016.

Revenue Details

Instruments and Accessories: Revenues at the segment grew 17.2% to $397.8 million in the quarter, driven by strong procedure growth and increased sales of stapling and vessel sealing products. Revenues realized per procedure were approximately $1,830 compared with $1,810 in the year-ago quarter.

System: Sales increased 7% to $216.4 million buoyed by higher revenues from operating lease activities. Intuitive Surgical placed 166 system orders in the quarter, up from 130 in the year-ago quarter. Management at Intuitive Surgical noted that 27 systems were placed under operating lease transactions, compared with 15 systems in the year-ago quarter.

Service: The Company registered revenues of $142 million, up 11% on a year-over-year basis due to growth in the installed base of da Vinci systems.

International Growth

Per management, the company posted revenues of $205 million outside the U.S., up 11% from the second quarter of 2016.

The company placed 63 system orders, compared with 51 in the year-ago quarter and 56 in the first quarter of 2017. These included 29 into Europe, 14 into Japan, 5 into India, 5 into Australia and 3 into China.

Intuitive Surgical, Inc. Price, Consensus and EPS Surprise

 

Intuitive Surgical, Inc. Price, Consensus and EPS Surprise | Intuitive Surgical, Inc. Quote

Financial Update

 

Intuitive Surgical ended the reported quarter with $3.4 billion in cash, cash equivalents, and investments, down by $1.4 billion on a year-over-year basis.

Our Take

We believe that the growing adoption of Intuitive Surgical’s da Vinci system among physicians for general surgery, oncology, urology and gynecology procedures is a key growth catalyst. Moreover, increasing procedural volumes outside the U.S. present significant growth opportunities for the company.

Zacks Rank & Key Picks

The company has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical sector are Edwards Lifesciences Corporation EW, CryoLife, Inc. CRY and EDAP TMS SA EDAP. Notably, EDAP TMS sports a Zacks Rank #1 (Strong Buy), while Edwards Lifesciences and CryoLife have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EDAP TMS represents an impressive return of 25.5% for the last three months. The company delivered a solid earnings surprise of 533.3% in the last reported quarter.

Edwards Lifesciences has a long-term expected earnings growth rate of 15.2%. Notably, the stock boasts an impressive one-year return of 10%.

CryoLife yielded a strong return of 3.5% over the last one month. The stock delivered a positive earnings surprise of 80% in the last reported quarter.

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Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report
 
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