ISRG Stock Soars After Returning To Pre-Covid Growth Levels

ISRG Stock Soars After Returning To Pre-Covid Growth Levels

Robotic surgery giant Intuitive Surgical (ISRG) handily beat third-quarter expectations with 20% procedure growth for its da Vinci system, leading ISRG stock to surge Wednesday.


Procedure growth is an important metric for Intuitive Surgical. The company sells or leases its robotic surgery system. But a key component of its revenue is the sale of one-time instruments and accessories. Growth in procedures leads to growth in those items.

Since the third quarter of 2019 — at the outset of the Covid pandemic — Intuitive Surgical has reported a 16% compound annual growth rate for procedures. The third quarter of 2022 easily outdid that at 20% and ISRG stock surged.

Wall Street called for a more modest 14.4% growth rate, Bank of America Securities analyst Travis Steed said in a report to clients. Intuitive Surgical is “seeing staffing/supply chain pressures easing and hospitals still prioritizing da Vinci after reexamining budgets,” he said.

In morning trades on today’s stock market, ISRG stock jumped 12.5% ​​near 218. That helped shares top their 50-day moving average for the first time in roughly a month.

ISRG Stock: System Placements Dip

Overall, revenue climbed 11% to $1.56 billion and beat forecasts for $1.51 billion, according to FactSet. Intuitive Surgical also reported adjusted earnings of $1.19 per share, flat year over year. But that easily beat ISRG stock analysts’ forecast for $1.12 a share.

Intuitive Surgical placed just 305 da Vinci systems, down 9%. But that topped views for 288, according to Bank of America’s Steed. He kept his buy rating on ISRG stock.

“We still see Intuitive Surgical as one of the best positioned names in medtech,” he said.

The company also reported strong growth in sales of one-time instruments and accessories. Revenue from those items advanced 15% to $872 million. The increase was primarily due to the 20% growth in procedure volume, partially offset by exchange-rate headwinds and buying patterns.

More Procedures Expected

For the year, Intuitive Surgical now expects 17%-18% procedure growth, up from its prior forecast for 14%-16.5%, UBS analyst Graham Doyle said in his note to clients. The company also expects operating expenses to grow just 21%-23% vs. prior expectations for 23%-25%.

“It also provided some relatively positive commentary on the hospital (capital expenditures) environment during the conference call with it flagging that it has yet to see any signs of weakness in rest of the world and that the US remains competitive rather than necessarily pressured from a macro perspective,” Doyle said.

Doyle kept his buy rating and 320 price target on ISRG stock.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.


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