Oppenheimer has maintained its Perform rating for Intuitive Surgical (NASDAQ: NASDAQ:ISRG), following the company's third-quarter financial results.
Intuitive Surgical reported revenue of $2.04 billion, aligning with market estimates of around $2.00 billion to $2.01 billion. The company's GAAP earnings per share (EPS) of $1.56 exceeded expectations, which were set at $1.37 and $1.30 according to consensus.
In the third quarter, Intuitive Surgical saw 110 new placements of its da Vinci 5 (dV5) surgical system in the United States, a significant increase from the 70 placements in the second quarter. This accounts for half of the total U.S. placements during the quarter.
The full market release of the dV5 is anticipated by the middle of 2025. Additionally, the company has secured clearance for the dV5 in South Korea, is in the process of discussions in Japan, and has submitted the CE filing in the European Union, with a launch expected around the end of 2025.
Despite the progress, Oppenheimer expressed a cautious outlook on the stock, highlighting several concerns. The firm pointed out that the U.S. market appears to be nearing saturation, with only about 10% of the system's capacity unused. The value proposition of the dV5 system remains uncertain to the analysts.
Moreover, the current valuation of Intuitive Surgical, which stands at approximately 18 times forward price-to-sales (P/S) and 74 times forward price-to-earnings (P/E) for the year 2025, is seen as assuming a perfect scenario.
In other recent news, Intuitive Surgical's third-quarter performance has garnered attention from various financial analysts. Stifel raised its price target from $475.00 to $525.00, maintaining a Buy rating, following the company's robust third-quarter results, which included approximately 18% growth in procedures and sales reported at $2.04 billion.
BTIG also noted Intuitive Surgical's strong third-quarter performance, raising its price target from $518 to $535. The company's system sales and procedure volumes surpassed expectations, with the latter showing an 18% year-over-year growth.
Evercore ISI adjusted its price target on Intuitive Surgical to $490, highlighting the company's revenue growth and operating margin expansion. Baird increased its price target to $565.00, anticipating future EPS growth.
InvestingPro Insights
Intuitive Surgical's financial performance and market position are further illuminated by recent data from InvestingPro. The company's market capitalization stands at an impressive $168.4 billion, reflecting its dominant position in the surgical robotics market. Intuitive's revenue growth remains strong, with a 14.47% increase in the most recent quarter, aligning with the positive placement figures for its da Vinci systems mentioned in the article.
InvestingPro Tips highlight that Intuitive Surgical is trading near its 52-week high and has shown a high return over the last year, with a one-year price total return of 71.94%. This performance underscores the market's confidence in the company's growth trajectory and the potential of its da Vinci systems, including the new dV5 model.
However, the InvestingPro data also reveals a high P/E ratio of 80.27, which supports Oppenheimer's cautious stance on valuation. This elevated multiple suggests that investors are pricing in significant future growth, potentially overlooking the risks mentioned in the article, such as market saturation and upcoming competition.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Intuitive Surgical, providing a deeper understanding of the company's financial health and market position.
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