Intuitive Surgical at 52-Week High on High Procedural Volume

Share price of Intuitive Surgical ISRG rallied to a new 52-week high of $661.94 on Jun 23, eventually closing a tad bit lower at $661.32. This represents a strong one-year return of about 33.64%, much better than the S&P 500’s return of 0.52% over the same time frame.

Currently, Intuitive Surgical carries a Zacks Rank #3 (Hold). The stock has a market cap of 25.17 billion and a long-term expected earnings growth rate of 11.26%.

Key Catalysts

Intuitive Surgical reported an impressive first quarter of 2016 with exceptional global procedure growth, solid capital placement, strong product margin and new product launches. Notably, the company reported adjusted earnings of $3.67 per share, which beat the Zacks Consensus Estimate by 21 cents.

Strong procedural volumes of da Vinci System (robot-assisted surgery system) in U.S. and international markets was a major growth catalyst. Intuitive Surgical shipped about 110 da Vinci Systems in the first quarter (99 in the year-ago quarter). Worldwide, da Vinci procedures grew nearly 17% from the first quarter of 2015.

Intuitive Surgical’s expanding product line is also a significant positive for the long term. The recent FDA approval of the ‘Integrated Table Motion’ for da Vinci Xi Surgical System (in collaboration with Hill-Rom Holdings) is a noteworthy development for the company. This has also been accompanied by the launch of 30-millimeter Xi stapler, Xi Single Site Instrument and clinical usage of SP products, which are likely to propel growth for the company.

Estimate Revisions

The Zacks Consensus Estimate for fiscal 2016 decreased by 11 cents to $17.56 over the last 60 days. Similarly, for fiscal 2017, estimates dropped by 7 cents to $20.51 over the same time frame.

Key Picks

Better-ranked stocks in the sector include CryoLife Inc CRY, IRadimed Corp IRMD and Masimo Corp. MASI. All the three stocks sport a Zacks Rank #1 (Strong Buy).

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