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Intuitive Surgical (ISRG) Up on Solid Preliminary Q4 Results

Zacks

Intuitive Surgical, Inc. ISRG recently announced preliminary results for fourth-quarter 2018, wherein the top line surpassed the Zacks Consensus Estimate.

Revenues are anticipated to total $1.05 billion, up 17% year over year and well above the Zacks Consensus Estimate of $1.02 billion.

The company is scheduled to release full financial results on Jan 24.

Shares Up


Intuitive Surgical’s fourth-quarter preliminary results boosted its shares, which climbed 3.2% to $517.11 at close, following the announcement.

Notably, the Zacks Rank #2 (Buy) stock rallied 22.7% compared with the industry’s 0.7% growth in a year’s time. The current level also compares favorably with the S&P 500 index’s 6.7% decline.

Highlights

Preliminary instrument and accessory revenues increased approximately 18% in fourth-quarter 2018 to approximately $539 million, up 17.9% year over year, driven primarily by growth of the da Vinci procedure.

In the fourth quarter, the company contributed $25 million to establish the Intuitive Foundation to help reduce the global burden of disease and suffering through research, education and philanthropy.

Full-Year Results

On a full-year basis, revenues are expected to be approximately $3.72 billion, marking an increase of approximately 19% from the prior-year quarter. The Zacks Consensus Estimate pegs revenues of $3.70 billion.

Preliminary instrument and accessory revenues for 2018 increased approximately 20% year over year to $1.962 billion. Preliminary service revenues for 2018 increased approximately 11% year over year to $635 million.

da Vinci Update

Fourth-quarter worldwide da Vinci procedures increased approximately 19% from the year-ago quarter. Notably, the company shipped 290 da Vinci Surgical Systems in the fourth quarter compared with 216 in the year-ago period. Intuitive Surgical expects da Vinci procedures to grow approximately 13-17% in 2019.

It is also encouraging to note that in recent times, the China National Health Commission has announced a new quota to allow the sale of 154 new surgical robots into China through 2020, which includes da Vinci Surgical Systems. In late 2018, Intuitive Surgical also obtained clearance for the da Vinci Xi Surgical System in China.

Moreover, Intuitive Surgical began direct operations for da Vinci products and services in Taiwan in late 2018.

Our Take

Intuitive Surgical is set to report a solid fourth-quarter performance. Notably, the company’s projected top line beats the consensus mark. If Intuitive Surgical manages to outpace the Zacks Consensus Estimate in the fourth quarter, it will mark a consecutive beat since the last reported quarter.

Flagship da Vinci system is also expected to have put up a solid show in the fourth quarter. Additionally, Intuitive Surgical enjoys a strong presence in China, where it received clearance for the da Vinci Xi Surgical System. Commencement of da Vinci sale in Taiwan also adds to the positives. Management expects strong contributions from da Vinci in 2019. However, the company has not issued any guidance for 2019.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Veeva Systems Inc VEEV, Penumbra, Inc. PEN and OPKO Health, Inc OPK. While Veeva Systems and OPKO Health currently sport a Zacks Rank #1 (Strong Buy), Penumbra carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Veeva Systems’ long-term earnings growth rate is projected at 19.5%.

Penumbra has a long-term earnings growth rate of 20%.

OPKO Health’s long-term earnings growth rate is projected at 12%.

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