Intuitive Surgical ( ISRG ) reported first
quarter 2013 earnings per share of $4.56 beating the Zacks
Consensus Estimate of $4.00 while surpassing the year-ago results
of $3.50. Net income was $188.9 million (or $4.56 per share), up
31.6% year over year.
Intuitive Surgical reported revenues of $611.4 million for the
first quarter, up 23% year over year. The results beat the Zacks
Consensus Estimate of $581 million.
On a segment basis, the company reported revenues from
instruments and accessories of $261.1 million, up 26% year over
year, in the first quarter. The growth was driven by a 18%
year-over-year increase in da Vinci surgical procedures. The growth
in procedures was 20% upon exclusion of the effect of the leap
year. Growth in international urology, U.S. gynecology and general
surgery procedures was partly offset by a drop in prostatectomy
procedures in the U.S.
Revenues from sales of systems were $255.9 million, up 24% year
over year. The increase in systems revenue was due to higher sales
of 164 da Vinci Systems compared with 140 systems in the year-ago
quarter. Service revenue was $94.4 million, up 17% year over year,
primarily due to growth in the base of da Vinci Surgical
Intuitive Surgical enjoyed a gross margin of 71% in the reported
quarter, down from 71.9% the year-ago quarter. The company reported
operating expenses of $183.1 million in the quarter, up about 12.6%
year over year. The increase was due to growth in selling, general
and administrative expense (up 13.9%) and research and development
expenditure (up 8.3%).
Operating income was $251 million, or about 41% of sales, in the
reported quarter compared with $193 million, or 39% of sales, in
the prior-year quarter.
Intuitive Surgical exited 2013 with cash, cash equivalents and
investments of $3,116 million, up 6.7 year over year.
Intuitive Surgical modified its procedure growth rate to the
lower end of 20% to 23% from 20% to 23% earlier. The company
expects revenues to grow at the higher end of 16% to 19% for 2013
from 16% to 19% earlier. Operating income continues to be forecast
in a band of 38% to 39% of sales for 2013.
We expect a number of procedures that are currently completed
either in an open surgical manner or with laparoscopy to be
eventually replaced by da Vinci surgery, as robotic surgery becomes
the standard of care in many instances. The company enjoys a
virtual monopoly in robotic surgery with little competition.
Intuitive Surgical's recurring revenue stream continues to be
robust and provides a shield against cyclicality of revenues,
arising from the sale of discretionary capital equipment to
hospitals. However, we believe that until the global economy
recovers fully, the stock may come under pressure as investors
ponder whether lingering macro economic uncertainty weakens
hospitals' commitment to buy high-cost robotic systems.
The pace of adoption of robotic surgery may therefore be lumpy
and growth in usage require acceptance from patients and training
to medical practitioners. Intuitive competes with Accuray
Inc. ( ARAY ) in certain
Our rating factors in the attractive growth prospects of the
company, given da Vinci system's leading status as an enabler of
robotic minimally invasive surgery. The installed base of the
company continues to grow as hospitals feel compelled to upgrade
The stock carries a Zacks Rank #3 (Hold). Align
Technology Inc. ( ALGN ) and The
Cooper Companies Inc. ( COO ) carry Zacks Rank
#2 (Buy) and are expected to do well.ALIGN TECH INC (ALGN): Free Stock Analysis
ReportACCURAY INC (ARAY): Free Stock Analysis ReportCOOPER COS (COO): Free Stock Analysis ReportINTUITIVE SURG (ISRG): Free Stock Analysis
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