Intuitive Surgical Raised to Hold

Zacks Equity Research
January 27, 2014

On Jan 24, Zacks Investment Research upgraded Intuitive Surgical, Inc. (ISRG) to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell).

Why the Upgrade?

Intuitive Surgical reported fourth-quarter 2013 net earnings of $4.28 per share, on Jan 23, which outpaced the Zacks Consensus Estimate of $3.79 and were up 1% year over year.

Despite persistent weak macro economic conditions, coupled with stiff hospital capital spending environment and sluggish benign gynecologic procedures in the U.S, the company generated modest revenue growth.

Moving ahead, in 2014, Intuitive Surgical seeks to expand the use of its novel technology -- da Vinci -- in several general surgery applications. Establishing its foothold in the markets of Europe and Japan is also an important agenda for the company in the upcoming quarters. Further, the absence of no direct competition plays a major role in strengthening the company’s hopes to gain a better foothold in the niche market.

Stabilization of growth is expected as it is believed that robotic surgery will increasingly start replacing open surgical procedures in the long term. Moreover, the risk of adoption of its new and innovative products is a major concern for the company as it requires longer time to gain market acceptance. However, good and effective training regarding its products will ensure widespread adoption of the same.

Other Stocks to Consider

Investors interested in the medical instruments industry can look at Cepheid (CPHD) and Natus Medical Inc. (BABY) both carrying a Zacks Rank #1 (Strong Buy), and Echo Therapeutics, Inc. (ECTE) carrying a Zacks Rank #2 (Buy)

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Read the Full Research Report on BABY
Read the Full Research Report on ECTE

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