Intuitive Surgical Gains On FDA Approvals, Competition Rife

On Jan 26, we issued an updated research report on Intuitive Surgical, Inc. (NASDAQ:ISRG) . The stock has a Zacks Rank #3 (Hold).

Intuitive Surgical’s share price movement has been compelling over the last three months. The company represented a solid return of almost 17.1%, surpassing the broader industry’s gain of 13.8%. The current level is slightly lower than the S&P 500's return of 11.9%.

Intuitive Surgical exited the fourth quarter on a solid note, beating the Zacks Consensus Estimate for both the counts. The company outperformed in the Mature and Growth procedures, especially in general and thoracic surgery. Procedure performance in Asia showed continued strength with solid growth in China, Japan and Korea. Also, expansion in gross margin buoys optimism. A positive outlook for the coming quarters raises our confidence.

Intuitive Surgical has gained significantly on the CE Mark approval for da Vinci X in Europe. The stock has got a further boost from the recent FDA approval of the same. In the fourth quarter of 2017, Intuitive Surgical submitted the 510(k) application to the FDA for its 60-millimeter stapler for da Vinci X and Xi platforms.

However, a surge in operating expenses and the reinstatement of the medical device tax are likely to hurt the bottom line. Further, the da Vinci Surgical System’s long sale and purchase order cycle is a drag. Cut-throat competition in the niche space is also a major concern.

Key Picks

A few better-ranked stocks in the broader medical sector are Amedisys (NASDAQ:AMED) , Bio-Rad Laboratories (NYSE:BIO) and ResMed (NYSE:RMD) .

Bio-Rad Laboratories has a Zacks Rank #2 (Buy). The company has a long-term expected earnings growth rate of 25%.

Amedisys has a long-term expected earnings growth rate of 18.5%. The stock carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ResMed has a long-term expected earnings growth rate of 13%. The stock holds a Zacks Rank #2.

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