Intuitive Surgical Plunges 4% Despite 3Q Earnings Beat

Shares of Intuitive Surgical fell 3.6% in after-market trading on Thursday despite the company’s better-than-expected results for the third quarter.

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Intuitive Surgical (ISRG), a leading company in robotic-assisted surgery, reported a 4.5% Y/Y decline in its 3Q revenue to $1.08 billion reflecting the impact of the pandemic on procedure volumes and system placements. The pandemic led to the postponement of elective procedures as the focus of healthcare systems shifted to addressing the COVID-19 outbreak.

Adjusted EPS fell 19.2% to $2.77 in 3Q. Analysts expected EPS of $2.06 on revenue of $971 million.

Shipments of the company’s da Vinci Surgical Systems declined 29% to 195 and caused a 21% decline in systems revenue to $268 million. However, revenue from instruments and accessories grew 4% to $631 million driven by a 7% rise in da Vinci procedure volume.

Following the 3Q results, BTIG analyst Ryan Zimmerman reiterated a Hold rating and commented “3Q results aside, we expect investors to be more heavily focused on the lack of visibility around the rate of recovery in 4Q and into 2021 as patients who delayed a scheduled surgery come back and the delay of disease identification makes procedures hard to model in the near-term.”

He further noted “Additionally, mgmt. continues to expect a challenging near to mid-term environment for capital placements as hospital finances remained strained, and it is possible that resurgences of COVID like those being experienced in parts of Europe and the US could negatively impact da Vinci procedures moving forward.”

The analyst believes in the long-term prospects of the company but is concerned about the lack of visibility into near-term trends. (See ISRG stock analysis on TipRanks)

Overall, the Street has a Moderate Buy consensus for Intuitive Surgical based on 10 Buys, 7 Holds and 1 Sell. With shares advancing 25.3% year-to-date, the average analyst price target of $697.31 indicates that a possible downside of 5.9% lies ahead.