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Here's Why You Should Hold on to Intuitive Surgical Stock Now
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Intuitive Surgical, Inc. (ISRG - Free Report) is well poised for growth on improving adoption of da Vinci Surgical System, strong international presence and robust recurring revenue base. However, stiff competition remains a concern.
Shares the company have gained 38.1% compared with the industry’s growth of 21.7% in a year’s time. Meanwhile, the S&P 500 Index has rallied 15.4% in the same timeframe.
The company, with a market capitalization of $80.11 billion, designs, manufactures and markets the da Vinci surgical system and related instruments and accessories. Notably, the da Vinci surgical system is an advanced robot-assisted surgical system. It anticipates earnings to improve 8% over the next five years. Moreover, it has beat estimates in each of the trailing four quarters, the average surprise being 63.8%.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
Stiff competition in the global MedTech space remains a concern.
What’s Favoring the Stock?
Intuitive Surgical’s robot-based da Vinci surgical system enables minimally-invasive surgery, which reduces risks associated with open surgery. The company continues to gain from this system, which in turn bolsters overall performance.
Although the procedure volume declined 19% in second-quarter 2020 primarily owing to the COVID-19 pandemic-induced disruption, Intuitive Surgical placed 5764 da Vinci surgical systems in the quarter, with the installed base growing 9% year over year.
The company is gradually gaining prominence in markets outside the United States. In second-quarter 2020, international revenues totaled $316.6 million, up 1% on a year-over-year basis. The improvement can be attributed to solid procedure growth in Asia.
Outside the United States, Intuitive Surgical placed 72 systems in the second quarter compared with 80 in the prior-year quarter. Of these, 18 were in Europe, 18 in Japan and 21 in China.
Intuitive Surgical’s business model ensures that it continues to generate revenues from initial capital sales of da Vinci Surgical Systems, and subsequent sales of instruments, accessories and services. Recurring revenues, as portion of total revenues, continue to grow at a much higher rate compared with system sales. This ensures a steady stream of income, even in testing times.
Which Way Are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $4.13 billion, indicating a decline of 7.7% from the prior-year quarter. The same for earnings stands at $8.60 per share, suggesting a fall of 32.6% from the year-ago reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space include West Pharmaceutical Services, Inc. (WST - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and PerkinElmer, Inc. . While both PerkinElmer and Thermo Fisher sport a Zacks Rank #1 (Strong Buy), West Pharmaceutical carries a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher has an estimated long-term earnings growth rate of 15%.
PerkinElmer has a projected long-term earnings growth rate of 17.4%.
West Pharmaceutical has a projected long-term earnings growth rate of 17.4%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Here's Why You Should Hold on to Intuitive Surgical Stock Now
Intuitive Surgical, Inc. (ISRG - Free Report) is well poised for growth on improving adoption of da Vinci Surgical System, strong international presence and robust recurring revenue base. However, stiff competition remains a concern.
Shares the company have gained 38.1% compared with the industry’s growth of 21.7% in a year’s time. Meanwhile, the S&P 500 Index has rallied 15.4% in the same timeframe.
The company, with a market capitalization of $80.11 billion, designs, manufactures and markets the da Vinci surgical system and related instruments and accessories. Notably, the da Vinci surgical system is an advanced robot-assisted surgical system. It anticipates earnings to improve 8% over the next five years. Moreover, it has beat estimates in each of the trailing four quarters, the average surprise being 63.8%.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
Stiff competition in the global MedTech space remains a concern.
What’s Favoring the Stock?
Intuitive Surgical’s robot-based da Vinci surgical system enables minimally-invasive surgery, which reduces risks associated with open surgery. The company continues to gain from this system, which in turn bolsters overall performance.
Although the procedure volume declined 19% in second-quarter 2020 primarily owing to the COVID-19 pandemic-induced disruption, Intuitive Surgical placed 5764 da Vinci surgical systems in the quarter, with the installed base growing 9% year over year.
The company is gradually gaining prominence in markets outside the United States. In second-quarter 2020, international revenues totaled $316.6 million, up 1% on a year-over-year basis. The improvement can be attributed to solid procedure growth in Asia.
Outside the United States, Intuitive Surgical placed 72 systems in the second quarter compared with 80 in the prior-year quarter. Of these, 18 were in Europe, 18 in Japan and 21 in China.
Intuitive Surgical’s business model ensures that it continues to generate revenues from initial capital sales of da Vinci Surgical Systems, and subsequent sales of instruments, accessories and services. Recurring revenues, as portion of total revenues, continue to grow at a much higher rate compared with system sales. This ensures a steady stream of income, even in testing times.
Which Way Are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $4.13 billion, indicating a decline of 7.7% from the prior-year quarter. The same for earnings stands at $8.60 per share, suggesting a fall of 32.6% from the year-ago reported figure.
Stocks to Consider
Some better-ranked stocks from the broader medical space include West Pharmaceutical Services, Inc. (WST - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and PerkinElmer, Inc. . While both PerkinElmer and Thermo Fisher sport a Zacks Rank #1 (Strong Buy), West Pharmaceutical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher has an estimated long-term earnings growth rate of 15%.
PerkinElmer has a projected long-term earnings growth rate of 17.4%.
West Pharmaceutical has a projected long-term earnings growth rate of 17.4%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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