ISRG Rises 4.6%, Near-Term Outlook Still Bleak - Analyst Blog


Although Intuitive Surgical, Inc. ( ISRG ) rose 4.6% to $380.99 yesterday following an upgrade by a brokerage firm rendering a favorable long-term view, we remain skittish about its near term outlook and the future of robotic-assisted surgery, which the company is desperately trying to promote.

Despite the rise, shares of ISRG are still hovering around 52-week low. Following its disappointing earnings release on Jul 18, the stock has not seen any upward estimate revisions, but only downward revisions for the full year 2013 and 2014. Consequently, the stock has a Zacks Rank #4 (Sell).

In the second quarter of the year, Intuitive Surgical failed to meet the Zacks Consensus Estimate both in terms of earnings (by 15 cents) and revenues (by $17 million). Further, ISRG significantly lowered its 2013 guidance based on its dismal performance in the quarter.

Due to soft capital sales of the da Vinci system, ISRG lowered its revenue expectation to flat to 7% for 2013 compared with the earlier range of 16% to 19% for 2013. It forecasted operating margin in the band of 37% to 38% compared with the earlier outlook of 38% to 39% for 2013.

Intuitive Surgical also lowered its procedure growth outlook to the range of 15%-18% compared to the previously guided range of 20%-23%. This was mainly due to moderate growth in U.S. benign gynecologic procedures.

Despite the U.S. Food and Drug Administration (FDA) approval for the company's surgical robots in 2000, it is undoubtedly riddled with several complications and customer complaints. Several reports have revealed that patients suffered complications or injuries owing to the robotic-assisted surgeries. Surgical robots are generally used to perform gall bladder removals, hysterectomies, cardiovascular operations and prostatic surgeries.

However, it seems that Intuitive Surgical only cares about promoting the robotic-assisted surgery as an alternative to conventional minimally-invasive surgery by propagating ideas through billboards, radio, television and YouTube. These propagative ideas often lacked concrete proof and ignored several complications that could arise due to robotic surgeries.

While we stay away from ISRG for now, other stocks that are currently worth a look in the medical instruments industry include Fluidigm Corp. ( FLDM ) with a Zacks Rank #1 (Strong Buy), and Mindray Medical International Ltd ( MR ) and Echo Therapeutics, Inc. ( ECTE ), both with a Zacks Rank #2 (Buy).

ECHO THERAPEUT (ECTE): Free Stock Analysis Report

FLUIDIGM CORP (FLDM): Free Stock Analysis Report

INTUITIVE SURG (ISRG): Free Stock Analysis Report

MINDRAY MEDICAL (MR): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ECTE , FLDM , ISRG , MR

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