Wells Fargo Transfers Coverage on Intuitive Surgical (ISRG) to a Market Perform; Raises Valuation Range
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Wells Fargo transfers coverage on Intuitive Surgical, Inc. (Nasdaq: ISRG) to a Market Perform. Valuation Range increased to $275-$295 from $240-$260.
Wells analyst says, "We believe that hospital capex spending will most likely stabilize in 2010 and be flat to +/- 2% yr/yr, but due to lower penetration than most hospital infrastructure purchases ISRG should recover sooner. Our new EPS estimates of $5.77 for 2009 and $7.20 for 2010 reflect our view that even with modest systems growth in 2010, ISRG can grow the top line and EPS in excess of 20% yr/yr. This is well ahead of medical equipment and large cap device peers. Our valuation range of $275-295 is based on an EV/EBITDA range of 19.0-21.0x our 2010 EBITDA estimate of $12.24/share."
"ISRG still derives only 21% of its revenue from international markets. Based on our analysis of the market opportunity, this could be closer to 42%. Additionally, ISRG is much less penetrated internationally than it is domestically. We estimate that ISRG was only 14% penetrated on a systems basis and ~6% penetrated on a procedural basis in 2008. Our forecasts include assumptions of 36% yr/yr international revenue growth versus 22% yr/yr domestic growth in 2010. We model ISRG exiting 2011 with more than 25% international exposure."
To see all the upgrades/downgrades on shares of ISRG, visit our Analyst Ratings page.
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