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Hype Asset of the Day | October 25th, 2022



Intuitive Surgical, Inc. (NASDAQ: ISRG)

Intuitive Surgical is a leading developer and manufacturer of surgical robotics systems. Currently, the company controls an incredible 80% of the global surgical robotics market, an industry on track to be worth just shy of $100 billion by 2024. Having recently released stellar Q3 results, Intuitive Surgical has seen an increase in mentions by 114% over the last day, prompting investors to wonder if they should take a position in the company now. Currently, shares of Intuitive Surgical trade at $219.63.

Positive Hype

There are numerous reasons that you should consider taking a position in Intuitive Surgical, here are some of the major ones.


  • In a press release that came fast on the heels of its results, Intuitive Surgical announced that it had become "the largest provider of robotic-assisted surgical technology training to be accredited by the Royal College of Surgeons of England (RCS England)." If that weren't enough, Intuitive Surgical announced just weeks ago that its da Vinci SP is the first single-port surgical system cleared for use in Japan.


  • The company repurchased $1 billion of its common stock in the quarter, and Intuitive is authorized to purchase as much as $2.5 billion more.


  • Intuitive Surgical’s overall revenue jumped 11% to $1.6 billion, while net income fell 16% to $324 million, which was a smaller-than-expected drop.


  • Instruments and accessories revenue, which is recurring, jumped 15%, also fuelled by a 20% increase in procedures.


  • Not only did the company beat Wall Street's expectations on both the top and bottom lines, but it also reported that its installed base of da Vinci systems and da Vinci procedures rose 13% and 20%, respectively, in the quarter from the year-ago period.


  • It's worth noting that both the top and bottom line numbers easily exceed expectations, with analysts' consensus estimates calling for revenue of $1.5 billion and EPS of $1.13.


  • The company also closed the quarter with a nice stash of cash on hand, $7.4 billion in cash, cash equivalents, and investments in total.


  • Bear in mind, this follows annual revenue and net income growth of 31% and 61%, respectively, over the last two years alone.


  • Intuitive increased its annual forecast for procedure growth to the range of 17% to 18%, a sign that it’s positive about the future.


  • The global market for robotic surgery is set to advance at a compound annual growth rate of more than 10% through this decade, according to BIS Research. Currently, the company controls an incredible 80% of the global surgical robotics market, an industry on track to be worth just shy of $100 billion by 2024.

Negative Hype

Intuitive Surgical fared well in times of crisis, however, there are still more hurdles on the company’s way to success. Here are two reasons it might not be the best time to invest in Intuitive Surgical.


  • Global delays in procedure volume due to the COVID-19 pandemic have impacted Intuitive Surgical's financial results in recent quarters, but the company is proving its ability to recover quickly from these headwinds.


  • Furthermore, this year, higher inflation has lifted the prices of components and supply chain issues have delayed deliveries. So, these have become additional headwinds for Intuitive.


Conclusion

While the stock is still trading down 40% from the beginning of the year, in line with many of the broader headwinds affecting the market at large, its core business remains robust. Beyond the top and bottom line numbers, which gave the company a clean bill of health, management shared other developments that show that even in the most trying times, the company is a smooth operator. Taken together, the robust results, the declining share count, the strong financial position, and the cheaper stock price suggest Intuitive Surgical is a stock just "aching" to be bought.


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