Intuitive Surgical Inc.
) reported net earnings of $156.8 million or $3.99 per share for
the third quarter of the year, beating the Zacks Consensus
Estimate of $3.38 per share. However, net earnings went down
14.3% from $183.0 million or 10.5% from $4.46 per share in the
third quarter of 2012.
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Revenues in the quarter dipped 7% to $499 million, missing the
Zacks Consensus Estimate of $527 million. The decline was
attributable to modest growth in benign gynecology, along with
changing capital spending priorities in hospitals due to the
implementation of the Affordable Care Act.
Operating income fell 20.3% to $174.2 million from $218.5 million
in the year-ago quarter. With this, operating margin declined 290
basis points to 34.9% from 37.8% a year ago.
Instruments and Accessories
grew 10% to $239 million in the quarter. Thanks to the 16%
year-over-year rise in da Vinci surgical procedures on the back
of growth in general surgery, U.S. gynecology and international
plunged 32% to $159 million due to poor da Vinci Surgical Systems
sales. ISRG sold 54 less da Vinci Surgical systems compared with
155 systems in the prior-year quarter.
rose 15% to $101 million. The rise can be attributable to higher
installed base of da Vinci Surgical Systems.
Intuitive Surgical had cash, cash equivalents and investments of
$2.5 billion as of Sep 30, 2013, down from $2.9 billion as of Dec
31, 2012. The company spent $694 million to repurchase about 1.74
million shares in the quarter, reflecting an average price of
Intuitive Surgical continues to be affected by stiff hospital
capital spending environment and sluggish benign gynecologic
procedures in the U.S. These are taking a toll on the sale of its
da Vinci Surgical systems.
Further, long-term controversies about robotic surgeries hurt the
stability of the stock. Use of surgical robots is riddled with
several complications and customer complaints. Several reports
have revealed that patients suffered complications or injuries
owing to the robotic-assisted surgeries.
Despite the beat, investors do not look happy due to lower
profits in the third quarter. This has reflected in the 0.5% fall
in stock price after the market closed yesterday.
Being a Zacks Rank #3 (Hold) stock, we remain on the sidelines
about ISRG. Currently, we prefer other scrips from medical
instruments industry and they include
MAKO Surgical Corp.
). All of them carry a Zacks Rank #2 (Buy).