Jimmybob- your thoughts...ISRG
Intuitive Surgical Earnings Preview: Revenue Growth Likely To Taper In Q4 After An Exceptionally Strong Q3
Leading surgical robots manufacturer Intuitive Surgical (NASDAQ:ISRG) is scheduled to report its Q4 fiscal 2015 earnings on January 21st. (Fiscal years ending in December.) After an exceptionally strong third quarter, driven by a strong growth in general surgeries segment in the U.S and a rise in international procedures, Intuitive likely sawits revenue growth taper a bitin Q4. In the third quarter, ahigh proportion of orders for Xi Systems pushed up the average selling price of daVinci systems from $1.4 million to $1.6 million. We suspectthe trend reversedin Q4 asthe mix of orders placed for Inuitives surgical systems rebalanced towards the norm. However, Intuitives future outlook remains promising as the company remains focused on expanding the application of da Vinci systems.
Our price estimate of $500 for Intuitive Surgicalis 10% below the current market price.
Expanding The Scope Of da Vinci Surgical Systems To Boost Future Growth
The company is committed to expanding the scope of daVinci Systems in general surgery, especially colorectal surgery and hernia repair. While colorectal cancer is the third most common type of cancer and is fast becoming a dreadful reality for many, hernia repair devices and consumables market is expected to grow at 6.5% to reach $6.1 billion in 2020. Also, Intuitive has a significant growth opportunity in other segments such as cardiothoracic surgeries and lung surgeries, considering that procedural volumes in these segments as a percentage of the total procedural volumes was almost negligible for Intuitive Surgical in 2014. With the aforementioned factors in mind, Intuitive can see a rise in number of procedural volumes by increasing its focus on expanding the applications of da Vinci systems.
As procedure volumes grow, the demand for da Vinci surgical system units will likely increase, as new hospitals and healthcare institutions shift to robotic surgery. Existing customers could be incentivized to trade-in old machines and add more capacity. The sale of related instruments and accessories will also rise with growth in procedure volumes, as instruments have a limited useful life, after which they need to be replaced
