Markets

Intuitive Surgical (ISRG) Q3 Earnings: A Surprise in Store?

A generic image of a calculator, a person holding a pen and papers laid out on a table.
Credit: Shutterstock photo

Intuitive Surgical Inc.ISRG is scheduled to release third-quarter 2015 results on Oct 20. In the last reported quarter, the company had posted a positive surprise of 16.2%.On an average, Intuitive Surgical has outperformed the Zacks Consensus Estimate by 14.4% over the last four quarters.

Let's see how things are shaping up for this announcement.

Factors at Play

The growing adoption of Intuitive Surgical's da Vinci system among physicians for general surgery, oncology, urology and gynecology procedures is a key growth catalyst in our view. Moreover, increasing procedure volumes outside the U.S. opens up significant growth opportunity for the company.

We believe that the launch of additional EndoWrist instruments will expand its product portfolio, which will in turn help drive top-line growth. Though the company's flagship da Vinci system is instrumental in boosting the top line, we feel that the high price of the systems may slightly hinder its adoption.

Meanwhile, unfavorable product mix has impeded margins over the last couple of quarters and we feel that margins will continue to remain under pressure in the second half of 2015 as well. In addition, volatile foreign exchange is expected to remain a major overhang for Intuitive Surgical.

Earnings Whispers

Our proven model does not conclusively show that Intuitive Surgical is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP : Intuitive Surgical has an earnings ESP of 0.00%. That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $3.61 per share.

Zacks Rank: Intuitive Surgical carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company's 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Masimo MASI , earnings ESP of +3.23% and a Zacks Rank #1.

Hologic HOLX , earnings ESP of +2.38% and a Zacks Rank #1.

ICON Public Limited Company ICLR , earnings ESP of +1.00% and a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

INTUITIVE SURG (ISRG): Free Stock Analysis Report

HOLOGIC INC (HOLX): Free Stock Analysis Report

MASIMO CORP (MASI): Free Stock Analysis Report

ICON PLC (ICLR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

ICLR MASI HOLX ISRG

Other Topics

Earnings Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More