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ISRG STOCK WRITE UP


ISRG (INTUITIVE SURGICAL INC)

  • P/E: 48
  • GAAP DILUTED YEAR-OVER-YEAR EPS GROWTH LAST QUARTER: $1.13
  • SECTOR: HEALTH TECHNOLOGY
  • ASSETS-LIABILITIES: 7.05
  • DIVIDEND: none

ISRG is the ticker for Intuitive Surgical Inc, a company endeavoring in the manufacture and distribution of robotic surgical devices. The company recently gained FDA approval for a lower-cost device. They have a clean balance sheet with a history of upside surprises against earnings expectations, and report again 7/20/17.
Revenues increased nearly 14%, while EPS increased 32% compared to the Q1 '16 results. While liabilities decreased on a year-over-year basis, assets decreased by a larger margin. R&D spending increased 36%, and administrative costs rose 16%. Taxes were cut in half, although the revenues increased, due to modified accounting principles, and tax benefits for the employee share-based compensation.. The ratio of assets-liabilities decreased from 9.14 to 7.05, which is still a considerable margin. ISRG increased their share buyback by a multiple of 250 on a year-over-year basis, and divested investment assets to free cash for employee share compensation, as well.
Some health professionals have stated that Intuitive Surgical's Davinci surgery system is not beneficial, as a surgeon still must control the device's robotic arms. Davinci is most useful for minimally invasive gynecological and urological procedures which utilize robotic arms to avoid human error. For surgeries in which the doctor is capable of performing the operation reasonably manually, there is no practical application for a $2 million device to replicate the movements via remote control. A study showed that minimally invasive urological procedures performed with Davinci led to reduced recovery time, with a similarly favorable result. Increased demand for the product's use in gynecological procedures, general surgery, urological operations, and kidney cancer applications led to a nearly 21% increase in global Davinci unit shipments.
Gary Guthart has been the company's CEO since 2010. He has been with the company since 1996, he holds a BS and PhD, and worked with computer-assisted surgery at Stanford Research Institute prior to joining ISRG. The Davinci X surgical system received FDA clearance 5/31/17. Guthart states that the Davinci X is designed to provide services at a lower price point. This will provide an opportunity to provide services to clients who may not benefit enough from the system to justify a $2 million expenditure.
Although there are no direct competitors which can be utilized for stock valuation comparison, it is important to note that Medtronics, Alphabet Inc, and Johnson and Johnson all have connections with smaller surgical robotics companies. ISRG trades at a premium to the average S&P stock with a P/E of 48, but its growth rate is also above average at 14% revenue and 32% EPS growth. ISRG has beat wall street expectations in each of the last 8 quarters, propelling expectations higher with each quarterly report.







https://www.estimize.com/isrg

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