Intuitive Surgical's Q1 Gives This Already Bullish Analyst 'Even Higher Confidence'

Leerink said in a note Wednesday that Intuitive Surgical, Inc.'s ISRG first quarter results give it even higher confidence in procedure growth trends.

Leerink reiterated its Outperform rating and lifted its price target from $840 to $850, citing higher cash per share assumption.

Analysts Richard Newitter and Ravi Misra noted the company reported 18 percent procedure growth, which exceeded expectations. Gross margins were also better than expected, the analysts added.

Revenues of $674 million exceeded the consensus forecast of $666 million and the firm's forecast of $672 million, as better-than-expected procedure revenues helped to offset the shortfall in system revenues.

• Services revenues of $140 million also exceeded forecasts
• Gross margin guidance raised to the upper half of the 69 to 71 percent range
• Operating expenditure growth is expected at the upper end of the management guidance range of 15-18 percent

Related Links: Would You Let A Robot Do These Jobs?

Delving on Procedure

• Q1 procedure growth at 18 percent, accelerating from Q4 levels and coming against tougher comparisons
• U.S. procedure growth at 14 percent compared to Leerink's 9 percent forecast, as momentum continued to build behind key general surgery areas such as hernia & thoracic.
• Q2 procedure growth guidance was increased to 12-14 percent from 9-12 percent. Leerink's updated 2017 procedure growth forecast of 13.3 percent is in line with the new guidance.

"And, we expect ISRG will sustain its premium multiple especially in front of now three new product cycles expected to hit in '18-'19 (Sp, lung biopsy, "X") which we believe have the potential to be needle-moving to ISRG's top & bottom line," Leerink said.