Intuitive Surgical, Inc. (NASDAQ: ISRG) reported upbeat first-quarter 2022 results, surpassing analysts’ expectations for both earnings and revenues. The company manufactures robotic-assisted products, mainly with the da Vinci surgical system and associated instruments and accessories, to improve clinical outcomes of patients through minimally invasive surgery.
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Despite the beat, shares of the company are currently down more than 12% on the day. Importantly, the quarterly gross margin was impacted by elevated logistics costs and manufacturing inefficiencies.
Results in Detail
Intuitive Surgical reported adjusted earnings of $1.13 per share, which comfortably beat the consensus estimate of $1.08 per share. It recorded adjusted earnings of $1.17 per share in the first quarter of 2021. Adjusted net income stood at $413 million, down 3.3%.
Additionally, revenues came in at $1.49 billion, topping analysts’ expectations of $1.43 billion, increasing 15% year-over-year. Growth in da Vinci procedure volume and system placements drove the results.
On a segment basis, instruments and accessories revenue grew 15% year-over-year to $810 million, while systems revenue came in at $428 million, up 16%. Remarkably, the company placed 311 da Vinci Surgical Systems in the reported quarter, up from 298 systems placed in the prior-year quarter.
Globally, da Vinci procedures rose 19% year-over-year despite being impacted by the resurgence of COVID-19 during the quarter.
As of March 31, 2022, the da Vinci Surgical System installed base increased to 6,920 systems, up 13% from 6,142 as of March 31, 2021.
Adjusted gross margin was 69.8%, down from 71.8% in the prior-year quarter, while total operating expenses stood at $601.6 million, up 23.8%.
During Q1 2022, the company spent $107 million to repurchase 398,000 shares at an average price of $268 per share.
Official Comments
In response to the reported results, Intuitive Surgical CEO Gary Guthart said, “Customer demand for our products was healthy in the first quarter despite a challenging global environment. We remain focused on meeting that demand with high-quality products and services while advancing our innovation programs.”
Outlook
Intuitive Surgical expects procedure growth of 12% to 16% in 2022, including the impact of uncertainty related to the pandemic.
Additionally, the adjusted gross profit margin is likely in the range of 69% to 70.5% of net revenue, while adjusted operating expense growth is anticipated to land between 23% and 27%. Capital expenditures for 2022 are expected to be in the range of $700 million to $900 million.
Wall Street’s Take
Following the results, BTIG analyst Ryan Zimmerman maintained a Buy rating on Intuitive Surgical but reduced the price target to $355 (37.3% upside potential) from $360.
Zimmerman said, “We believe the company is well-positioned to continue growing procedures, and we view shares as attractive as recovery ensues.”
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 10 Buys, five Holds, and no Sell ratings. The average Intuitive Surgical price target of $335.38 implies 29.7% upside potential. Shares have dropped 1% over the past year.
Bloggers Weigh In
Bloggers seem to like ISRG stock. TipRanks data shows that financial blogger opinions are 73% Bullish on ISRG, slightly higher than the sector average.
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