Intuitive Surgical, Inc. (ISRG) recently hit a new all-time high at $393 after reporting awesome Q1 results that saw sales jump 75% from last year. Although the valuation picture does look a bit rich, the next-year estimate is projecting 20% earnings growth.
Company Description
Intuitive Surgical, Inc., together with its subsidiaries, designs and manufactures the highly specialized da Vinci surgical systems that allow surgeons to control instruments within a patients body for minimize invasiveness, something frequently referred to as ‘surgical robotics’. Intuitive was founded in 1995 and has a market cap of $14.48 billion.
Shares of ISRG have been on fire for the last year after bottoming with the market in March of 2009, jumping from just above $82 to a recent all-time high at $393.92. The gains come on the back of booming sales, recently on display when the company reported much better than expected Q1 results on April 15.
First-Quarter Results-April 15
Revenue for the period was up huge from last year, increasing 75% to $329 million. Earnings also came in strong at $2.12, 28% ahead of the Zacks Consensus Estimate. Intuitive has been solid over the last year as the economy has strengthened, boasting an average earnings surprise of 21%.
Intuitive saw strong growth from both of its major segments, with revenue from its flag ship da Vinci Surgical Systems product up 77% from last year to $155. Its instruments and accessories revenue was up over 50% to $123 million.
Strong Balance Sheet
The company also emerged from the quarter with a stronger balance sheet, boosting cash and short-term investments by $574 million from last year to $1.4 billion.
Growing International Presence
Intuitive is also progressing on the international front, with non-U.S. revenue comprising 21% of total sales as the company sold its first systems into Japan. For the quarter, Intuitive sold 104 da Vinci systems, with 80 in the U.S., 11 in Europe and 13 in ‘other’ regions. The company did note that its Japan sales are expected to decline in the short-term and that it is seeing some weakness from its European customers as the E.U. struggles with high levels of debt and economic uncertainty.
Estimates Climbing
Estimates have responded to the great quarter and promising outlook, with the current year up 75 cents in the last month to $8.49. The next-year estimate is up 81 cents in the same time to $10.16, a bullish 20% growth projection.
Valuation
With some very big gains in tow, shares of ISRG aren’t cheap, trading with a forward P/E multiple of 45X, a premium to the market and its industry peers. Its P/B multiple of 7.92X is a premium to the industry average of 2.65X.
5-Year Chart
Shares of ISRG have been on a tear for the last year after bottoming out with the market in March of 2009, recently hitting a new all-time high at $393.92. Look for support at the previous breakout area around $350 on a pullback, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service. Zacks Investment Research
