On Friday, BTIG maintained a positive outlook on Intuitive Surgical (NASDAQ:ISRG) shares, raising the price target to $421 from the previous $412, while reiterating a Buy rating on the stock.
This adjustment follows Intuitive Surgical's first-quarter financial results for 2024, where the company reported revenue of $1.89 billion, marking an 11.5% increase year-over-year, and an adjusted EPS of $1.50. These figures surpassed BTIG's and consensus estimates, which predicted revenues of $1.88 billion and $1.87 billion respectively, and an adjusted EPS of $1.47 and $1.42.
The upgraded price target comes in response to Intuitive Surgical's performance, which saw system sales exceed expectations by 3.2% and procedure volumes grow by an impressive 16% year-over-year.
BTIG had previously anticipated that hospital purchases of the company's systems might decline in anticipation of the new Da Vinci 5 (Dv5) system. However, the robust demand and the option for hospitals to upgrade existing systems have demonstrated a healthy capital expenditure environment.
Intuitive Surgical's focus now shifts to the Dv5 system, with investors eyeing future earnings estimates for fiscal years 2025 and 2026. The company is expected to optimize its supply chain ahead of a broader launch of the Dv5 system in the first half of 2025.
BTIG highlighted the strong early clinical feedback for the Dv5 but emphasized that the recent financial results should not be overlooked. The 16% year-over-year procedure growth outpaced street expectations by approximately 200 basis points.
Moreover, Intuitive Surgical has been expanding its growth drivers through new indications and clearances for both the SP and Ion systems. With the company's operating expense guidance remaining steady at 11%-15%, there is potential for improved profitability, a point of interest for investors monitoring Intuitive Surgical's financial health and operational efficiency.
InvestingPro Insights
Following BTIG's positive outlook on Intuitive Surgical and their raised price target, InvestingPro data reinforces the company's strong market position. Intuitive Surgical boasts a substantial market capitalization of $132.08 billion, indicative of its significant presence in the medical technology sector. The company's revenue growth has been robust, with a 14.49% increase over the last twelve months as of Q4 2023, which aligns with the solid financial performance highlighted by BTIG. Furthermore, the company's gross profit margin stands at an impressive 66.39%, underscoring its ability to maintain profitability amidst growth.
However, investors should be aware of the high valuation multiples, as reflected in the P/E ratio of 72.81 and Price/Book ratio of 9.93, which suggest the stock is trading at a premium. This is further emphasized by two InvestingPro Tips: Intuitive Surgical is trading at a high earnings multiple and also at a high P/E ratio relative to near-term earnings growth. These metrics might be particularly relevant for those considering the stock's long-term value proposition.
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