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Barclays Praises Impressive Q3 From Intuitive Surgical

Reviewing Intuitive Surgical, Inc.'s ISRG 4.64% third quarter results, Barclays commended the company for another solid beat, with strong capital/procedure growth and margin outperformance.

Analyst Matthew Taylor noted that the company's revenues rose 16 percent year-over-year and beat the consensus estimate, with upside in systems revenues and instrument & accessory revenues supporting the beat. Services revenues were in line. The revenue upside along with gross margin expansion achieved on the back of one-time factors and expense control led to the earnings beat.

Barclays sees upside to the company's full year procedure growth forecast of 14-15 percent. The firm also noted that Systems will have a tougher comparisons in the fourth quarter. The company raised its gross margin guidance to 71.5 percent from 70-71 percent.

Forward Expectations

Barclays expects a slight deceleration in procedure growth in 2017, weighed down by tougher comps and slowing mature revenues. Nevertheless, the firm believes the company can grow its revenue in double-digits and leverage earnings per share.

Although Barclays remains bullish on the outlook for the company, it believes multiple expansion is tough from hereon, given more challenging comps, lumpy OUS trends, and procedure growth moderation in mature areas.

Raising Estimates, Price Target

Barclays raised its earnings per estimate, driven mostly by better gross margins, and consequently lifted its price target to $760 from $750. The firm stays at Overweight on shares.

At last check, shares of Intuitive Surgical was down 3.58 percent at $695.87.

Oct 2016Wells FargoInitiates Coverage OnOutperform
Aug 2016Raymond JamesInitiates Coverage onOutperform
Jul 2016CitigroupMaintainsBuy

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