Canaccord Genuity Raises Price Target Following Intuitive Surgical's (ISRG) 3Q15 Earnings Results

Canaccord Genuity reiterated a Buy rating on Intuitive Surgical (NASDAQ: ISRG), and raised the price target to $625.00 (from $615.00), following the company's 3Q15 earnings results. ISRG reported another double-digit procedure growth quarter, as well as strong system placements and the second quarter in a row of solid gross margins.

Analyst Jason Mills commented, "We recommend adding to or beginning positions in ISRG on the heels of strong Q3 results, highlighting positive business trends that we saw also in Q2. These results were punctuated by another excellent quarter in robotic procedure utilization – ISRG reported another double-digit procedure growth quarter (+15% Y/Y) – as well as strong system placements (117 vs. our 113E) and the second quarter in a row of solid gross margins (69.3% vs. our 65.5%E). Our July 2015 upgrade was largely based on the premise of improving business conditions and market dynamics; not only did this thesis materialize in Q3, but we see myriad reasons double-digit procedure growth – and solid capital demand – will continue over the next 12-18 months. Indeed, against the backdrop of continued stabilization in procedure growth of legacy procedures (dvP, dvH), we are seeing continued momentum in new robotic procedure subsets - hernia, colon and rectal resection – which helped drive 12% Y/Y US procedure growth, a modest acceleration over the 10% growth reported in 1H:15. Moreover, the significant investment the company has made in its overseas infrastructure has begun to pay dividends with Q3 OUS procedure growth coming in at 28% Y/Y. Over the next 12-18 months, we continue to be much more confident in ISRG’s procedure growth profile than we were in 2013-14, owing to more favorable clinical & economic utility profiles for da Vinci in these new procedure areas, the fertile opportunities in international markets, an expanding product pipeline (Single-Site instruments, 30mm EndoWrist stapler), and gross margin improvement. We would be buyers of ISRG at current levels, and increase our price target to $625 from $615, portending >30% forward 12-month return."

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 $473.01 yesterday.

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