) has released disappointing preliminary results for the second
quarter of 2013. The results were affected by weak sales of the
company's da Vinci Surgical Systems. Sales for this flagship
product are expected to decline by 6% during the quarter.
Though revenues are expected to grow 7% to $575 million, it lags
the Zacks Consensus Estimate of $631 million by roughly 9%.
Preliminary second-quarter net income is expected to be $160
million, up 3% year over year. The current Zacks Consensus
Estimate for earnings in the second quarter is pegged at $4.32.
Intuitive Surgical, based in Sunnyvale, CA, managed to sell 143
da Vinci Surgical Systems in the second quarter compared with 150
in the year-ago quarter. Sales increased everywhere, including
Europe, Japan and the rest of the world, except the U.S.
Sales of the da Vinci product decreased in the U.S. (from 124 to
90 year over year) due to the ongoing economic pressure to reduce
hospital costs and the sluggish growth rate in benign gynecologic
surgeries. The decision of healthcare insurers to opt for
conservative treatments in outpatient settings led to lower
This, in turn, resulted in moderate benign gynecologic
surgeries. However, da Vinci procedures grew 18% in the quarter
on the back of strong general surgery procedures.
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Further, instruments and accessories revenues are expected to be
$265 million, up 18%. Sales were boosted by healthy procedure
growth, partially offset by reduction in stocking orders related
to a drop in system sales. Service revenues in the second quarter
are expected to grow roughly 14% to $95 million.
Following the announcement of the preliminary results, shares of
ISRG plunged 11% (or $56.58) after hours to $443.50 on Monday,
Jul 8. ISRG will release its full second-quarter results on Jul
Lower sales of the flagship da Vinci product is a matter of
concern. This is reflected in the company's Zacks Rank #4 (Sell).
We believe that Intuitive Surgical's products will experience
increased pricing pressure due to the stiff capital spending
environment in the U.S.
While we choose to avoid ISRG at this point of time, other
medical instruments stocks such as
) are worth considering. All these stocks carry a Zacks Rank #2