Robotic surgery giant Intuitive surgery (ISRG) easily exceeded third-quarter expectations with 20% procedural growth for its da Vinci system, sending ISRG stock surging on Wednesday.
Procedure growth is an important metric for Intuitive Surgical. The company sells or leases its robotic surgery system. But a key part of his income is the sale of unique instruments and accessories. The growth of procedures leads to the growth of these elements.
Since the third quarter of 2019 – at the start of the Covid pandemic – Intuitive Surgical has reported a compound annual growth rate of 16% for procedures. Q3 2022 easily topped that figure at 20% and ISRG stock surged.
Wall Street called for a more modest growth rate of 14.4%, Bank of America Securities analyst Travis Steed said in a report to clients. Intuitive Surgical “sees that staffing/supply chain pressures are easing and hospitals are still prioritizing da Vinci after re-examining budgets,” he said.
ISRG shares: drop in system investments
Overall, revenue rose 11% to $1.56 billion and beat forecast by $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 only 305 da Vinci systems, down 9%. But it topped views for 288, according to Bank of America’s Steed. He retained his buy rating on ISRG stocks.
“We continue to consider Intuitive Surgical to be one of the best-positioned names in medical technology,” he said.
The company also recorded strong growth in sales of single-use instruments and accessories. Revenue from these items increased 15% to $872 million. The increase is mainly due to the 20% growth in case volume, partially offset by exchange rate headwinds and purchasing habits.
More procedures expected
For the year, Intuitive Surgical now expects procedures growth of 17% to 18%, up from its previous forecast of 14% to 16.5%, said UBS analyst Graham Doyle. in its note to clients. The company also expects operating expenses to increase by just 21% to 23% compared to previous expectations of 23% to 25%.
“He also provided relatively positive comments on the hospital environment (capital spending) on the conference call, noting that he has yet to see any signs of weakness in the rest of the world and that the United States remains competitive rather than necessarily pressured from a macro point of view,” Doyle said.
Doyle retained his buy rating and price target of 320 on ISRG stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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