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Goldman Sachs Lifts Target on Intuitive Surgical (ISRG) Despite New Questions

July 20, 2012 11:47 AM EDT Send to a Friend
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Price: $467.50 --0%

Rating Summary:
    19 Buy, 7 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 1
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Goldman Sachs commented on Intuitive Surgical (NASDAQ: ISRG) following second quarter results after the close, which beat the consensus but raised new question about growth. Surprisingly, while the firm remains Neutral-rated on the name they raised their price target from $562 to $594.

The firm notes the EPS upside was driven by EBIT margins, which was primarily the result of expense timing. Goldman revised their model to reflect: (1) higher US system sales and procedure volumes; (2) increased operating expenses (particularly in 2H12); and (3) a more cautious outlook on Europe.

The key question, Goldman says, "is to what extent the US prostate business (circa 20% of annual procedures) deteriorates and whether new procedure categories yield enough upside to stem slowing growth in 2013". Over the longer-term gynecology,
new surgical indications (single-site cholecystectomy, colorectal) and new product adds (FireFly, EndoWrist) should drive sustained mid-teens growth, they said.

The firm said they would look for evidence that new procedures are driving upside or a pull back in the shares to become more constructive on the stock.

For an analyst ratings summary and ratings history on Intuitive Surgical click here. For more ratings news on Intuitive Surgical click here.

Shares of Intuitive Surgical closed at $544.21 yesterday.




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