Intuitive Surgical, Inc. (ISRG) has announced preliminary revenue expectations for the fourth quarter of 2014. The company’s estimated adjusted revenues of $601 million are almost in line with the Zacks Consensus Estimate of $600 million.
For full-year 2014, Intuitive Surgical estimates revenues to decline roughly 6% to $2.1 billion. The Zacks Consensus Estimate for the same is currently pegged at $2.1 billion.
Sunnyvale, CA-based Intuitive Surgical designs, manufactures and markets the da Vinci surgical system, which is an advanced robot-assisted surgical system. To date, the company has commercialized four generations of da Vinci surgical systems, namely, da Vinci standard (1999), da Vinci S (2006), da Vinci Si (2009) and da Vinci Xi (Apr 2014).
We note that the company is witnessing an increased adoption of its da Vinci system in U.S. general surgery procedures and worldwide urologic procedures. Remarkably, in 2014, nearly 570,000 surgical procedures were performed with the da Vinci Surgical system. The company estimates da Vinci procedure growth of roughly 10% and 9% year over year for the fourth-quarter and full-year 2014, respectively. Intuitive Surgical also projects 2015 procedure growth of roughly 7% –10%.
The da Vinci procedure growth is also expected to drive Instruments and Accessories revenues. Notably, Intuitive Surgical estimates fourth-quarter Instruments and Accessories revenues to grow roughly 5% year over year to $281 million, while the same for 2014 is projected to grow around 4% year over year to $1.1 billion.
Though the company’s flagship da Vinci system is instrumental in driving top-line growth, we feel that the high price of the systems may slightly hinder its widespread adoption. Moreover, adoption growth takes time, as each procedure needs to gain credibility.
We note that the company placed only 431 da Vinci surgical systems during 2014, compared with 546 systems during 2013. Consequently, da Vinci systems revenues are estimated to decrease nearly 24% to $633 million in 2014.
We feel that Intuitive Surgical is possibly facing the risk of lower capital spending by hospitals particularly owing to the current changes emanating from healthcare reforms in the U.S. At the same time, the implementation of the medical device excise tax (2.3%) on U.S. sales of medical products will also impact the company’s bottom line.
Nevertheless, the company continues to create new technologies for its surgical systems, which should boost penetration in the minimally invasive surgery market over the long term. Also, Intuitive Surgical operates in a niche market with no direct competition, which is a major positive in our view.
Currently, Intuitive Surgical carries a Zacks Rank #3 (Hold).
Better-ranked medical instruments stocks include Inogen (INGN), Synergetics USA (SURG) and Abiomed (ABMD). While both Inogen and Synergetics USA sport a Zacks Rank #1 (Strong Buy), Abiomed hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment