On Aug 28, we maintained our Neutral recommendation on
Intuitive Surgical, Inc.
). We are encouraged by an increase in the company's da Vinci
surgical procedures and healthy adoption of its new offerings as
well as growth in international urology and U.S. gynecology but
disappointed with its lower than expected earnings and revenues.
Intuitive Surgical reported 2013-second-quarter earnings per
share of $3.90, missing the Zacks Consensus Estimate of $4.05.
However, earnings surpassed the year-ago level of $3.75 per
share. Revenues grew 8% to $579 million, but trailed the Zacks
Consensus Estimate of $596 million by a significant margin.
Following the release of second quarter results, the Zacks
Consensus Estimate for 2013 went up 0.2% to $15.81 per share.
However, the Zacks Consensus Estimate for 2014 went down 1.1% to
Intuitive Surgical generates recurring revenues through its razor
blade business model that ensures the company continued revenue
generation following the initial sale of the da Vinci Si Surgical
System. This enables the company to ensure a regular stream of
income even in testing times.
However, ISRG faces the risk of adoption of its procedures.
Adoption growth takes time, as each procedure needs to gain
credibility. Furthermore, lower capital spending by hospitals
particularly during the current changes emanating from healthcare
reform in the U.S. and austerity measures in Europe may
negatively affect its results.
Other Stocks to Look For
Most of the top peers of ISRG are currently performing well. They
Echo Therapeutics, Inc.
Given Imaging Ltd.
). All of them carry a Zacks Rank #2 (Buy).
CYBERONICS INC (CYBX): Free Stock Analysis
ECHO THERAPEUT (ECTE): Free Stock Analysis
GIVEN IMAGING (GIVN): Get Free Report
INTUITIVE SURG (ISRG): Free Stock Analysis
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