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Can Instruments Drive Intuitive Surgical (ISRG) Q1 Earnings?

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Intuitive Surgical Inc.’s ISRG first-quarter 2018 results, expected to release on Apr 17 after market close, are expected to show steady growth in the instruments and accessories segment.

Revenues in all other segments are also expected to help the company generate solid results.

Last quarter, the company posted adjusted earnings of $2.54 per share, beating the Zacks Consensus Estimate of $2.27. Revenues totaled $892.4 million, which also outpaced the Zacks Consensus Estimate of $864 million.

For the first quarter, the Zacks Consensus Estimate for revenues is pinned at $766.61 million, indicating a year-over-year increase of 13.7%. The consensus estimate for earnings is $1.99, reflecting a year-over-year rise of 17.1%. Intuitive Surgical delivered positive earnings surprises in the past four quarters, the average being 15.01%.

Let’s delve deeper:

Instruments & Accessories in Focus

The instruments and accessories segment delivered solid results last quarter, accounting for 52.3% of total revenues. The company’s flagship da Vinci surgical system continues to be a revenue driver for the segment.  
For the first quarter, 2018 the Zacks Consensus Estimate for revenues is pegged at $435 million, showing a rise of 14.2% year over year.

Intuitive Surgical, Inc. Price and Consensus


Intuitive Surgical, Inc. Price and Consensus | Intuitive Surgical, Inc. Quote

In 2017, the company had introduced da Vinci X and Xi surgical systems in response to customer needs. In the fourth quarter, the da Vinci install base grew 13% year over year to 4,409 units. In fact, the company shipped 216 da Vinci systems in the fourth quarter, compared with 163 in the prior-year period.

The company also submitted 510(k) for the da Vinci X, Xi and Sp platforms in the same quarter.

Other Factors at Play


For 2018, Intuitive Surgical anticipates full-year procedure growth of 11% to 15%. The solid forecast indicates that the company will release encouraging numbers for the first quarter as well.

Procedure growth is expected to be driven by U.S. general surgery and procedures outside the United States.

Management expects operating expenses to rise 16-18% in 2018 as the company continues to invest in emerging markets and new technology, including computer-assisted surgery.

Gross margin is expected within 70-71.5% of net revenues in 2018.

Global Exposure

Intuitive Surgical gained significantly on the CE Mark approval for da Vinci X in Europe. Increased use of da Vinci in general surgery in the United States, continued growth in neurology in Europe and Japan and multispecialty growth in Korea and China also contributed to the rally.

Additionally, in the fourth quarter, the Ministry of Health in Japan listed for reimbursement in 12 procedures. In the quarter, revenues from outside the United States increased 17%, both sequentially and on year-over-year basis.


Intuitive Surgical is currently facing stiff competition in the niche space. After the regulatory approval of Transenterix's surgical robot for abdominal surgery last October, competition for Intuitive Surgical has intensified. Moreover, the MedTech giant Medtronic poses threat as it is possibly working on the launch of surgical robots this year.

Here is what our quantitative model predicts:

Although Intuitive Surgical carries a Zacks Rank #3 (Hold), it does not have a positive Earnings ESP  needed for increasing the odds of an earnings beat.

Zacks ESP: The Earnings ESP for Intuitive Surgical is 0.00. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Intuitive Surgical carries a Zacks Rank #3, which increases the predictive power of ESP. However, we also need a positive ESP to be confident of an earnings beat.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post earnings beat this quarter.

Bio-Rad Laboratories BIO has an Earnings ESP of +20.4% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cardinal Heath CAH has an Earnings ESP of +0.33% and a Zacks Rank #2 (Buy).

Abbott Laboratories ABT has an Earnings ESP of +0.75% and a Zacks Rank #3.

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