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Intuitive Surgical, Inc. Message Board

  • andersongordon Apr 12, 2013 10:59 AM Flag

    Three Drivers of Q1 2013 Earnings--$4.74 min-$5.07 max

    1) I have located 51 green domestic sites. Some of these may be from previous quarter, but there are usually those that are not picked up by my filter. Those tend to balance those missed from previous quarters. Consider 51 vs 4 in Q4 12 and 12 in Q3 12.
    2) I have upgrades at 70. Japan has 70 Da Vinci's that are Standard and S models. Expect a large number of upgrades and concurrent multiple orders as the SI model was approved for use in Japan by their regulatory body late last quarter. Consider 70 vs 52 in Q4 12 and 34 in Q3 12. There is an upside to this if many of the Japanese teaching hospitals and thought leaders see the training and collaboration potential of the dual consol and training modules of the SI. I think they have and were waiting for the regulators to move.
    3) I have repeat sales at 85 though the statistical capacity utilization model I use has 95-116 units. The model number I adjusted for 1st quarter impacts--Hospital boards have to meet, decide and act on the annual budget. This tends to delay orders into the second quarter. Compare 85 vs 114 Q4 12 and 79 Q3 12 repeats. Capacity utilizations Q1 (78%(est), 77.2% Q4 12 and 72.1% Q3. This is the # of surgeries / the number of systems / the # of weekdays in the quarter (1 surgery per day per system = 100% utilization).
    The huge number of general surgeons being added has changed the ecomomics of the Da Vinci and hospitals in the 150 bed size are now the lower economic estimate vs 200 a year ago. This correlates with the upsurge of new greenfields and the swelling of repeat sales as hospitals add this new demand to Urology and Gynocology.

    Price target day after earnings out: $625 ($4.74 EPS) to $676 ($5.07 EPS)

    Looking forward to your thoughts serious contibutors.


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    • andersongordon Apr 19, 2013 7:41 AM Flag

      What actuals varied from the estimates are these:
      1) There were 50 green sites versus the 51 estimate.
      2) The upgrades ("Trade-ins") were only 39 versus the 70 I expected. Japanese hospitals did not respond as quickly as expected. This was the biggest miss in my projections. This cost ~$0.50 in earnings. The trade ins will come, this is just a timing issue.
      3) The number of surgeries was down versus my models projections. From the revenue for instruments and accessories and the number of system I get 123,805 Q4 2012 and 123,744 Q1 2013. This is slightly below what I expected. This may be the first indication that all the negative publicity and law suits are having an impact or it may be a statistical data point can't draw a line. Because of the lower volume actuals and the higher number of unit sales in Q4 (175) the capacity utilization came down to 73.6% from 77.2% in Q4. This lower utilization number changed the projected repeat sales from the 85 I projected at 78% capacity to a revised projection of 58 versus the actual of 75. All in all this will be driven by procedure adoption and the new influx of general surgeries talked about in the Conference Call.

      Revised Price target for today based on actual released earnings $583 with $4.56 ES.

      The market is in a black mood and all the pall about the evils of Robotic Surgery (Greeneburg and company) should keep the price depressed below the normal market response of $583.


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