On Jan 29, 2013, we retained
), the pioneer in minimally invasive robotic surgery, at
Outperform following its strong results for the fourth quarter
2012. The company has delivered positive earnings and sales
surprises in each of the last four quarters.
Why the Retention?
Intuitive Surgical announced fourth quarter 2012 results on
Jan 22. Fourth quarter earnings per share came in at $4.25 well
above the Zacks Consensus Estimate of $4.03. Intuitive Surgical
reported revenues of $609.3 million for the fourth quarter, up
22.6% year over year and surpassing the Zacks Consensus Estimate
of $584 million.
Over the last 30 days, the Zacks Consensus Estimate for 2013
has moved up by 10 cents to $17.60. Moreover, the Zacks Consensus
Estimate for 2014 has risen 6 cents to $20.48 during the same
The Intuitive Surgical growth story remains compelling. The
company issued favorable guidance for 2013. Intuitive Surgical
expects procedure count to increase by 20% to 23% for 2013
propelled by general surgery and gynecology procedures in the
domestic market and overseas prostatectomy procedures. The
company expects revenues to grow in the range of 16% to 19% for
2013 with higher sales in the fourth quarter than in the first
quarter. Operating income is expected in a band of 38% to 39% of
sales for 2013.
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. Recurring revenues increased 27% year over year in the
fourth quarter 2012 and constituted 57% of revenues.
However, we believe that until the global economy recovers,
the stock may come under pressure as investors ponder whether
lingering macro economic uncertainty will weaken hospitals'
commitment to buy high-cost robotic systems. In the meantime, the
installed base of the company continues to grow as hospitals feel
compelled to upgrade their technology. Intuitive competes with
) in certain niches.
Other Stocks to Consider
Other stocks which are expected to do well include
Cantel Medical Corp.
). Both are rated at Zacks Rank #1 (Strong Buy).
ACCURAY INC (ARAY): Free Stock Analysis
CANTEL MED CORP (CMN): Free Stock Analysis
CYBERONICS INC (CYBX): Free Stock Analysis
INTUITIVE SURG (ISRG): Free Stock Analysis
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