Intuitive Surgical (ISRG) Edges Higher as Earnings More Than Triple, Analysts Raise PTs After 'Another Outstanding Quarter'

Intuitive Surgical (Nasdaq: ISRG) presented better-than-expected Q2 results to send its shares about 3% higher in pre-open trading Wednesday.

ISRG saw its EPS soar to $4.25 per share to smash the $3.06 per expected from market analysts, according to figures compiled by Thomson Reuters. On an adjusted basis, the company earned $3.92 per share.

Revenue soared 7.18% to $1.46 billion compared to $0.85 a year ago. The company’s flagship procedure “da Vinci” grew about 68% compared with a year-ago period.

“We are pleased with our second quarter procedure growth and financial results, which reflect both the demand for high-quality minimally invasive procedures as well as a return to surgeries deferred during the pandemic,” said Intuitive CEO Gary Guthart.

Stifel analyst Rick Wise said the company recorded “another outstanding quarter” on all fronts. He raised the price target on the Buy-rated ISRG to $1,100.00 per share from $1,060.00.

“Recording yet another exceptionally-robust quarterly-performance, Intuitive 2Q results outperformed Stifel/Consensus estimates on all key metrics: Sales, EPS, procedure volume growth, and system placements. Better-than-expected procedure-related Instruments & Accessories and System sales drove 14% upside to our revenue estimate, and at $3.92, a $0.74 EPS beat. Highlights: (1) procedure growth basically returned to pre-COVID levels as strong US, China and UK performances drove 68% procedure growth; (2) system placements also were robust as new and existing hospital customers expanded their installed base and upgraded to next-gen robotic capabilities; (3) system utilization was at the high-end of Intuitive’s historical average, suggesting that recent capital placements are not outpacing procedure-related demand; and (4) in-line with expectations, ION PRECISE trial completed enrollment. Encouragingly, the outperformance pushed ISRG 2021 procedure growth guidance to +27%-30% from +22%-26%,” the analyst commented in a note.

Similarly, BofA analyst Bob Hopkins says Q2 demonstrated an “unquestionable momentum” for the company’s da Vinci procedure.

His new price target is now $1,020.00 per share from the prior $890.00, although the “Neutral” rating remains unchanged amid high valuation.

“The global recovery in procedure volumes is partly responsible for this recovery but in our view the main driver has been a clear acceleration in the conversion to robotic surgery since the pandemic began. There may come a time when ISRG hits a bump in the road, but right now the news seems all good and we see no meaningful competitive threats on the horizon. The only issue in our view is valuation and valuation is why we remain Neutral rated,” he committed in a memo.

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