Needham Upgrades Intuitive Surgical (ISRG) to Buy; $225 PT

Needham & Co. upgrades Intuitive Surgical (Nasdaq: ISRG) to Buy with a $225 price target.

Based on a recent survey of 60+ hospital execs, the firm says it is more confident in da Vinci sales as all of the participants indicated that they had previously purchased a da Vinci system and were satisfied with the platform. Furthermore, about 29% of hospitals said they expect to purchase another da Vinci system within the next two years, including 15% which said they expect to buy a new platform in the next year.

Needham raised its FY08 and FY09 EPS estimates on Intuitive Surgical, reflecting a strong pipeline and positive sentiment for the company's long-term growth potential. For FY08, EPS move from $5.12 to $5.15, versus the consensus of $5.11. For FY09, EPS raised from $6.50 to $6.72, versus the Street estimate of $7.14. The firm initiated FY10, FY11 and FY12 EPS estimates on Intuitive of $8.33, $10.47 and $12.79, respectively.

The firm said, "Intuitive's proven business model supports consistent cash flows and a compelling investment during periods of market volatility. International revenues offer significant growth opportunities to complement U.S. growth. We expect the company to increase its OUS sales and marketing presence as these international markets adopt robotic surgery."

With shares of Intuitive Surgical trading about 8.6% higher to about $190 in pre-market trading, Needham's $225 price target represents potential price appreciation of about 18% from current levels.

Intuitive Surgical, Inc., together with its subsidiaries, engages in the design, manufacture, and marketing of da Vinci surgical systems for use in urologic, cardiothoracic, gynecologic, and general surgeries.

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