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Intuitive (ISRG) at a 52-Week High: What's Driving the Stock?

Zacks Equity Research

On Nov 29, shares of Intuitive Surgical ISRG scaled a new 52-week high of $594.17, closing the session slightly lower at $592.90. In fact, the stock has rallied nearly 11.9% since its third-quarter earnings announcement on Oct 17.

Solid growth in the flagship da Vinci procedures, surge in international sales and impressive full-year guidance prompted the rally.

Let’s take a closer look at the growth propellers.

Robust Q3 Earnings

The company exited the third quarter on a promising note, with better-than-expected earnings and revenue numbers.International revenues improved 36% year over year during the quarter. Per management, this upside was driven by higher uptake of instruments and accessories, robust procedure growth and impressive customer buying patterns.

Adjusted gross profit in the quarter improved 23.4% year over year.Gross margin in the quarter was 72%, highlighting an expansion of 50 basis points (bps).

The raised outlook for 2019 procedure growth buoys optimism among investors, indicating the continuation of this bullish momentum through the year.

Other Growth-Driving Factors

In November 2019, Intuitive Surgical attained FDA approval for two of the company’s da Vinci surgical systems. With the recent nods, Intuitive Surgical is likely to witness further momentum in its da Vinci surgical system. The clearance for these two innovative technologies is expected to enhance procedures that required sealing.

Moreover, investors are looking to a strong integration synergy from the company’s recent acquisition of the robotic endoscope unit of Schölly Fiberoptic’s business. This acquisition has integrated Schölly’s robotic endoscope manufacturing business and two Schölly sites into Intuitive Surgical’s operations.

Moreover, the company’s da Vinci procedures registered a 20% global uptick in the third quarter of 2019. The upside was driven by healthy growth in U.S. General Surgery. In the reported quarter, Intuitive Surgical placed 275 da Vinci surgical systems, with the installed base growing 12% year over year.

Meanwhile, Intuitive Surgical had a great run on the bourses in the past year. Over the past year, the stock has rallied 8%, higher than the broader industry’s growth of 5.4%. The company currently has a market cap of $68.52 billion. An earnings growth rate of 12.2% for the next five years instills optimism.

Zacks Rank & Other Stocks Worth a Look

Intuitive Surgical currently carries a Zacks Rank #2 (Buy).

A few other top-rankedstocks from the broader medical space are Haemonetics Corporation HAE, NuVasive, Inc NUVA and ResMed RMD. While ResMed sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Haemonetics has a projected long-term earnings growth rate of 13.5%.

NuVasive has an expected long-term earnings growth rate of 10.9%.

ResMed has a long-term earnings growth rate of 12.9%.

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Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report
 
NuVasive, Inc. (NUVA) : Free Stock Analysis Report
 
ResMed Inc. (RMD) : Free Stock Analysis Report
 
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