Despite Capital Budget Softness, Long Term Opportunity Remains Intact For Intuitive Surgical: Raymond James Analyst

  • Yesterday, Intuitive Surgical Inc ISRG reported lower-than-expected Q2 earnings.
  • Raymond James writes, "we were worried about the capital equipment environment, we admittedly did not think ISRG's 2Q print would be the 'event' that fully triggered the concern." 
  • The analysts believe slowing replacement cycle, supply chain issues, and constrained U.S. hospital budgets will temper system placements, thus driving an estimate reset. 
  • The absence of Systems guidance, the uncertainty around the duration of the capital equipment slowdown, and the lack of visibility into the timing of a new system will all weigh on sentiment. 
  • Raymond James lowered the price target to $255 from $294, with Outperform rating unchanged.
  • Wells Fargo says that ISRG continued to sound cautious about the U.S. capital environment, indicating that the softening U.S. capital pipeline in Q1 persisted in Q2. 
  • Overall, Wells Fargo continues to view ISRG's fundamentals as strong despite slowing trade-ins from the prior generation Si to the current Xi and the soft capital environment.
  • RBC Capital says that system utilization has remained strong despite tightened capital budgeting. 
  • On procedures, ISRG is seeing a healthy pace of utilization as customers seek efficiency gains on existing capital.
  • RBC has lowered the price target to $285 from $340.
  • Price Action: ISRG shares are down 6.65% at $209.81 during the market session on the last check Friday.
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