Intuitive Surgical (ISRG) Sees Interest After Analyst Says 'Buy'
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After dropping over $100 from its 52-week high, shares of Intuitive Surgical, Inc. (Nasdaq: ISRG) are up slightly in early trading Wednesday after Wells Fargo Securities upgraded the stock.
Wells Fargo analyst Michael Matson raised his rating on the pioneer in robotic surgery from Market Perform to Outperform and raised his valuation range from $285-$325 to $340-$360 per share.
Matson said analysis shows that US procedural penetration of the company's da Vinci device was 31% in the U.S., 4% internationally and 13% globally, providing plenty of upside.
While the company's growth rate will gradually moderate, he believes 2011 and 2012 consensus estimates are "too low."
The firm sees ISRG earning $8.96 in 2010 and $10.68 in 2011, both higher than the consensus of $8.67 and $10.42, respectively.
While US prostatectomy procedure growth has slowed significantly, US hysterectomy growth will remain strong through 2011 and then begin to moderate, the firm expects. Growth beyond 2011 will be driven by secondary procedures such as nephrectomy, myomectomy, and colorectal surgeries in the US and prostatectomy outside the US, the firm notes.
With $1.6 billion in cash, Matson said shares repurchases are likely to boost EPS growth in the longer run and provide support for ISRG shares in the shorter run.
Valuation is attractive at 25x 2011 EPS, or 22x ex-cash, Matson believes.
Shares of ISRG last traded at $272, up from yesterday's close of $269.12.
Wells Fargo analyst Michael Matson raised his rating on the pioneer in robotic surgery from Market Perform to Outperform and raised his valuation range from $285-$325 to $340-$360 per share.
Matson said analysis shows that US procedural penetration of the company's da Vinci device was 31% in the U.S., 4% internationally and 13% globally, providing plenty of upside.
While the company's growth rate will gradually moderate, he believes 2011 and 2012 consensus estimates are "too low."
The firm sees ISRG earning $8.96 in 2010 and $10.68 in 2011, both higher than the consensus of $8.67 and $10.42, respectively.
While US prostatectomy procedure growth has slowed significantly, US hysterectomy growth will remain strong through 2011 and then begin to moderate, the firm expects. Growth beyond 2011 will be driven by secondary procedures such as nephrectomy, myomectomy, and colorectal surgeries in the US and prostatectomy outside the US, the firm notes.
With $1.6 billion in cash, Matson said shares repurchases are likely to boost EPS growth in the longer run and provide support for ISRG shares in the shorter run.
Valuation is attractive at 25x 2011 EPS, or 22x ex-cash, Matson believes.
Shares of ISRG last traded at $272, up from yesterday's close of $269.12.
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