Morgan Stanley Maintains on Intuitive Surgical

In a report published Friday, Morgan Stanley analyst David Lewis maintained Equal-weight on Intuitive Surgical ISRG, with a NA price target. According to the report, the analyst's expectations were muted for the guide but our below the street EPS estimates are coming down 10 percent into 2014. The opportunity is significant but development costs are much greater, return timelines longer and a new system is less likely the cure call consensus had hoped. “We remain focused on instruments and incremental innovation to expand the TAM, which can be compatible with existing systems like the Si-e,” the report noted. “The Si-e strategy and risk/reward is clear, as the Si-e would drive negative mix and margin dynamics but could open up benign MIS procedures in lower reimbursed categories and alternate surgical/ambulatory settings. Timing is a bit peculiar as there was limited evidence of Si-e inflection in 2013 despite 90% US general surgery growth and it is less clear why the company would push a lower priced, three-arm system prior to a next generation system launch. This is the first down market strategy for Intuitive and while success here is important to the debate, Si-e is a piece of market creation not the panacea.” ISRG closed Thursday at $419.42 with shares trading down at 4.33 percent.