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Intuitive Surgical to Boost da Vinci Platform With Buyout

Zacks Equity Research

Intuitive Surgical, Inc. ISRG recently announced the acquisition of Schölly Fiberoptic’s robotic endoscope business. Intuitive Surgical is considered a pioneer and worldwide leader in robotic-assisted, minimally invasive surgery and has garnered reputation as manufacturer of da Vinci systems. This buyout is likely to bolster the acquirer’s da Vinci Surgical system through the addition of important aspects of da Vinci’s visualization system.

For investors’ notice, Intuitive Surgical is acquiring the robotic endoscope portion of Schölly Fiberoptic’s business. The buyout will help in the integration of Schölly’s robotic endoscope manufacturing line, and two Schölly sites into Intuitive operations.

About 200 staff from the three sites will join Intuitive Surgical’s team over the next 18 months.

Rationale Behind the Acquisition

Schölly Fiberoptic has been one of Intuitive Surgical’s strategic suppliers and the relation between both the companies goes back to more than 20 years. Schölly Fiberoptic has been involved in the process of designing and manufacturing several generations of imaging systems for Intuitive Surgical’s da Vinci surgical systems.

Both the companies share a common objective when it comes to advancement of health care by offering state-of-the-art technologies and innovative product features. Leading visualization forms a core pillar for Intuitive Surgical and the company anticipates it to remain crucial even in the future.

Notably, the buyout will help strengthen the acquirer’s supply chain and enhance its manufacturing capacity for imaging products.

Few Words About da Vinci Surgical System

Intuitive Surgical’s robot-based da Vinci surgical system enables minimally-invasive surgery that reduces the trauma associated with open surgery. The da Vinci System is powered by robotic technology which has provided the company with a solid exposure to medical mechatronics, robotics and Artificial Intelligence for healthcare.

Notably, FDA clearance of da Vinci SP surgical system, in March 2019, for neurologic surgical procedures is a major development in the platform.

Market Potential

According to a report by Healthcare Dive, the global robot-assisted endoscopy market is expected to witness a CAGR of 12.3% during the forecast period of 2019 to 2025. High precision and accuracy in minimally invasive surgeries that reduce fewer skin cuts, scars, efficient time and less recovery time are fueling the demand. Moreover, technological advancements, including remotely operated robots and WI-FI connectivity for endoscopy applications, are bolstering the market growth.

Hence, the buyout is likely to be a strategic one for Intuitive Surgical.

Price Performance

Year to date, this Zacks Rank #3 (Hold) stock has advanced 10.2% compared with the industry’s and the S&P 500 Index’s growth of 15.5% and 18.7%, respectively.

Key Picks

Some better-ranked stocks from the broader medical space are Penumbra, Inc. PEN, NuVasive, Inc. NUVA and Haemonetics Corporation HAE, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Penumbra has a long-term earnings growth rate of 21.5%.

NuVasive has a long-term earnings growth rate of 11.9%.

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

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