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Intuitive Surgical Gains 40.5% Year to Date: What's Driving the Stock?
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Intuitive Surgical (ISRG - Free Report) witnessed strong momentum in the year-to-date period. Shares of the company have rallied 40.5% compared with 8.4% growth of the industry in the same time frame. The S&P 500 Composite has risen 15.7% in the same period.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #1 (Strong Buy) company appears to be a solid wealth creator for its investors at the moment.
Intuitive Surgical, a Sunnyvale, CA-based company, designs, manufactures and markets the da Vinci surgical system, Ion endoluminal system, and related instruments and accessories. The company’s key product portfolio, the da Vinci surgical system, is an advanced robot-assisted surgical system. It comprises a surgeon’s console, patient-side cart, 3-D vision system, da Vinci Skills Simulator and Firefly Fluorescence Imaging.
The robot-based da Vinci surgical system enables minimally invasive surgeries that reduce the trauma associated with open surgery. ISRG also manufactures EndoWrist instruments, such as forceps, scissors, electrocautery tools, scalpels, and other surgical tools, including wrist joints for natural dexterity for various surgical procedures. The company operates through three segments — Instruments and Accessories, Systems and Services.
Image Source: Zacks Investment Research
Catalysts Driving ISRG’s Growth
Investors are upbeat about Intuitive Surgical’s robot-based da Vinci surgical system, which has been a critical driver for the company’s performance since its launch in 1999. The company increased its da Vinci surgical system installed base to 9,203 systems as of June 30, 2024, an increase of 14% compared with 8,042 systems reported as of the end of the second quarter of 2023. In the second quarter, ISRG placed 341 da Vinci surgical systems compared with 331 in the second quarter of 2023. In the second quarter of 2024, da Vinci surgical system placements included 70 da Vinci 5 systems.
ISRG ended the second quarter on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. Revenues improved year over year, primarily driven by continued growth in the company’s da Vinci procedure volume, along with strong Ion procedure growth. Intuitive Surgical has been increasing the pricing of procedures to fight inflationary pressure, which also aided sales growth. These tailwinds are likely to help in improving the stock’s price.
Investors are also optimistic about the recent FDA approvals received by Intuitive Surgical. Last month, the FDA cleared a labeling revision for da Vinci X and Xi specific to radical prostatectomy. In March, Intuitive Surgical received the FDA’s 510(k) clearance for da Vinci 5, the company’s next-generation multiport robotic system.
Factor That May Offset Gains for ISRG
Even though ISRG has solid fundamentals that should propel its future growth, the company faces several challenges that negatively impact its ability to conduct business. Geopolitical conflicts, along with a limited supply chain, could result in uneven da Vinci 5 system installations by 2024. A difficult catheter supply may negatively impact sales of Ion modulation systems.
Furthermore, a three-percentage point headwind in revenues is anticipated in 2024 due to deterioration in bariatric surgeries, difficulties in China from growing provincial robotic competition, and delayed tenders affecting capital placements.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%. Universal Health Service has gained 56.1% so far this year compared with the industry's 48.1% growth.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%. Quest Diagnostics shares have gained 13.9% so far this year compared with the industry’s 17.9% growth.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%. ABM's shares have risen 27.4% so far this year compared with the industry’s 17% growth.
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Intuitive Surgical Gains 40.5% Year to Date: What's Driving the Stock?
Intuitive Surgical (ISRG - Free Report) witnessed strong momentum in the year-to-date period. Shares of the company have rallied 40.5% compared with 8.4% growth of the industry in the same time frame. The S&P 500 Composite has risen 15.7% in the same period.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #1 (Strong Buy) company appears to be a solid wealth creator for its investors at the moment.
Intuitive Surgical, a Sunnyvale, CA-based company, designs, manufactures and markets the da Vinci surgical system, Ion endoluminal system, and related instruments and accessories. The company’s key product portfolio, the da Vinci surgical system, is an advanced robot-assisted surgical system. It comprises a surgeon’s console, patient-side cart, 3-D vision system, da Vinci Skills Simulator and Firefly Fluorescence Imaging.
The robot-based da Vinci surgical system enables minimally invasive surgeries that reduce the trauma associated with open surgery. ISRG also manufactures EndoWrist instruments, such as forceps, scissors, electrocautery tools, scalpels, and other surgical tools, including wrist joints for natural dexterity for various surgical procedures. The company operates through three segments — Instruments and Accessories, Systems and Services.
Image Source: Zacks Investment Research
Catalysts Driving ISRG’s Growth
Investors are upbeat about Intuitive Surgical’s robot-based da Vinci surgical system, which has been a critical driver for the company’s performance since its launch in 1999. The company increased its da Vinci surgical system installed base to 9,203 systems as of June 30, 2024, an increase of 14% compared with 8,042 systems reported as of the end of the second quarter of 2023. In the second quarter, ISRG placed 341 da Vinci surgical systems compared with 331 in the second quarter of 2023. In the second quarter of 2024, da Vinci surgical system placements included 70 da Vinci 5 systems.
ISRG ended the second quarter on a strong note, wherein both earnings and revenues beat the Zacks Consensus Estimate. Revenues improved year over year, primarily driven by continued growth in the company’s da Vinci procedure volume, along with strong Ion procedure growth. Intuitive Surgical has been increasing the pricing of procedures to fight inflationary pressure, which also aided sales growth. These tailwinds are likely to help in improving the stock’s price.
Investors are also optimistic about the recent FDA approvals received by Intuitive Surgical. Last month, the FDA cleared a labeling revision for da Vinci X and Xi specific to radical prostatectomy. In March, Intuitive Surgical received the FDA’s 510(k) clearance for da Vinci 5, the company’s next-generation multiport robotic system.
Factor That May Offset Gains for ISRG
Even though ISRG has solid fundamentals that should propel its future growth, the company faces several challenges that negatively impact its ability to conduct business. Geopolitical conflicts, along with a limited supply chain, could result in uneven da Vinci 5 system installations by 2024. A difficult catheter supply may negatively impact sales of Ion modulation systems.
Furthermore, a three-percentage point headwind in revenues is anticipated in 2024 due to deterioration in bariatric surgeries, difficulties in China from growing provincial robotic competition, and delayed tenders affecting capital placements.
Other Key Picks
Some other top-ranked stocks in the broader medical space are Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and ABM Industries (ABM - Free Report) . While Universal Health Service sports a Zacks Rank #1, Quest Diagnostics and ABM Industries presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%. Universal Health Service has gained 56.1% so far this year compared with the industry's 48.1% growth.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%. Quest Diagnostics shares have gained 13.9% so far this year compared with the industry’s 17.9% growth.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%. ABM's shares have risen 27.4% so far this year compared with the industry’s 17% growth.