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Leerink On Intuitive Surgical's Defense Department News


Leerink issued a research note on Intuitive Surgical, Inc. (NASDAQ: ISRG) Tuesday and maintained an Outperform rating with a $590 price target.

Analyst Richard Newitter anticipated a positive reaction to news that the Defense Department authorized the Defense Logistics Agency to purchase up to $430 million in "systems, supplies and upgrades" from Intuitive Surgical though February of 2020.

Newitter believed the news was an "incremental positive that another government agency is dedicating resources toward ISRG's capabilities" following a similar announcement from Veterans Affairs in March 2014.

The authorization is not a purchase commitment, however, "the contract should help streamline the purchase process for Department of Defense hospitals should they decide to buy da Vinci systems," according to Newitter.

The analyst note indicated that if sales are incremental to current estimates and occur evenly over the next five years, 2015 pro forma sales could see a 3 percent to 4 percent upside.

There were several factors that could not be determined, however, including the actual amount that may be purchased, an even spread of sales and that the revenue would be incremental to sales.

If the revenue was incremental to the firm's current forecasts, it would represent approximately $86 million per year in sales upside to the 2015-2017 sales estimates which could translate to $0.50 of incremental EPS, according to Newitter.

Intuitive Surgical recently traded at $509.16, up 1.1 percent.

Latest Ratings for ISRG

Apr 2021Deutsche BankMaintainsHold
Apr 2021CitigroupMaintainsBuy
Apr 2021Morgan StanleyMaintainsEqual-Weight

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