On Friday, the investment firm Baird increased its price target on shares of Intuitive Surgical (NASDAQ:ISRG) to $503 from the previous target of $487, while reiterating an Outperform rating on the stock. The adjustment follows Intuitive Surgical's strong performance in the second quarter of 2024, where the company surpassed consensus estimates on several metrics.
Intuitive Surgical reported the placement of 70 of its da Vinci surgical systems (dv5), exceeding the expectations of more than 35 to 40 units anticipated by the buy-side. Additionally, the company experienced a 17% growth in procedures, surpassing the projected 15-16% growth. System revenue and earnings per share (EPS) also outperformed expectations, with a 10% and 15% beat respectively.
Despite constraints on da Vinci system placements in the second half of 2024 and the first half of 2025, as well as moderating sales in China, Baird remains optimistic about Intuitive Surgical's prospects. The firm anticipates that the company's upgrade cycle will continue to drive double-digit growth in system sales and mid-to-high-teens growth in procedures. This is expected to contribute to an acceleration in revenue growth over the coming years.
Following the second quarter results, Baird has adjusted its financial projections for Intuitive Surgical upward, reinforcing the belief in the company's potential for continued success. This confidence is a crucial factor in supporting the premium multiple at which Intuitive Surgical's stock is traded in the market.
In other recent news, Intuitive Surgical has seen remarkable growth in its second-quarter earnings, with a 2% increase in sales and a 15% boost in earnings per share (EPS). This growth was driven by a 17% rise in procedure volume and system placements totaling 341, surpassing the expected 318.
The company's management has also updated its procedure volume guidance, now expecting a growth range between 15.5% to 17.0%, and reduced its operational expenditure growth forecast to a 10-13% year-over-year increase.
In response to these developments, several analyst firms have updated their ratings and price targets for Intuitive Surgical. RBC Capital maintained its Outperform rating and a $475.00 price target, while Evercore ISI adjusted its outlook, reducing the price target to $410 but retaining an 'In Line' rating.
BTIG raised its price target to $469, and Truist Securities increased its price target to $515, both maintaining a Buy rating on the stock. Baird also raised its price target to $487, highlighting the potential impact of the da Vinci 5 system on the company's future earnings.
Furthermore, the U.S. Food and Drug Administration approved a labeling revision for Intuitive's da Vinci X and Xi surgical systems, indicating survival rates for patients undergoing robotic-assisted radical prostatectomy are comparable to those of traditional open surgery. This decision was based on a study involving nearly 25,000 patients, reinforcing Intuitive Surgical's strong position in the medical technology industry.
InvestingPro Insights
The recent upgrade by Baird on Intuitive Surgical's price target to $503 is reflective of the company's robust second quarter performance in 2024, but it's also important to consider the broader financial context provided by InvestingPro. Intuitive Surgical is currently trading at a high P/E ratio of 73.62, indicating a significant earnings multiple that investors are willing to pay, possibly due to the company's consistent profitability over the past twelve months and a strong historical return over the last decade. This aligns with Baird's positive outlook and the observed 17% growth in procedures, which surpassed expectations.
InvestingPro Tips also highlight that Intuitive Surgical's liquid assets exceed short-term obligations, providing financial stability, and the stock generally trades with low price volatility, offering a more predictable investment in terms of price swings. Additionally, with a revenue growth of 13.81% in the last twelve months as of Q1 2024, Intuitive Surgical demonstrates a solid trajectory in its financial performance. For investors interested in deeper analysis, there are 14 additional InvestingPro Tips available, which can be accessed with a subscription. To enrich your investment strategy, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription at InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.