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Intuitive Surgical (ISRG) Q3 Earnings: What’s in Store?


Intuitive Surgical Inc ISRG is set to report third-quarter 2016 results on Oct 18, after the closing bell. Last quarter, the company reported earnings of $4.86 per share, which exceeded the Zacks Consensus Estimate by 65 cents.

We note that on an average, Intuitive Surgical posted a positive earnings surprise of 18.05% over the last four quarters.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

We believe that growing adoption of Intuitive Surgical’s da Vinci system among physicians for general surgery, oncology, urology and gynecology procedures is a key catalyst. In this regard, the venture with Dextera Surgical to initiate a joint development program on robotic staplers for da Vinci Surgical System is notable.

Moreover, rising procedural volumes outside the U.S. (particularly in Europe) fortifies the company’s market position. In fact, the integrated Table Motion product line has gained significant traction within a short span of time and is likely to boost the top line.

INTUITIVE SURG Price and EPS Surprise


Meanwhile, increased spending on product development and higher investment in expanding the company’s footprint in international markets are prudent moves to drive long-term growth in our view.

However, unfavorable currency fluctuations, increasing regulatory headwinds and low capital investment in hospitals are expected to be major dampeners.

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 currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $4.35.

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.

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

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:

Ariad Pharmaceuticals Inc. ARIA, with an Earnings ESP of +10.00% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here. Additionally, the stock represents a stellar one-year return of 81.8%.

Exelixis Inc. EXEL, with an Earnings ESP of +15.39% and a Zacks Rank #2. Notably, the company has a stupendous one-year return of 107.1%.

Glaukos Corporation GKOS has an Earnings ESP of +200.00% and carries a Zacks Rank #1. We note that the company represents an impressive one-year return of 59.9%.

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