Will Intuitive Surgical Stock Increase After Second Quarter Results?
Intuitive Surgical (NASDAQ: ISRG), a fast-growing robotic surgical platform company, is expected to release its second quarter 2021 results on Tuesday, July 20. We expect Intuitive Surgical to likely exceed revenue and profit expectations, driven by the continued rebound in the total procedure. volume. We expect the company to navigate well based on these trends in the last quarter. That said, our forecast indicates that Intuitive Surgical’s valuation is around $ 910 per share, which is 5% lower than the current market price of $ 954, implying that ISRG stock is currently highly valued, in our opinion. Our interactive dashboard analysis on Intuitive surgical pre-gains has additional details.
(1) Expected revenue higher than consensus estimates
Trefis estimates Intuitive Surgical revenue in the second quarter of 2021 at around $ 1.30 billion, slightly ahead of the consensus estimate of $ 1.26 billion. While a postponement of elective surgeries last year impacted overall revenue growth in the second quarter of 2020, ongoing vaccination programs and the gradual opening of economies have resulted in an increase in the volume of procedures over the course of the past few months, which should bode well for Intuitive Surgical’s sales growth. The volume of procedures increased among adolescents in the first quarter of 2021, pushing total sales up 18% to $ 1.3 billion. The sales growth reflects higher sales of instruments and accessories, as well as an increase in system placements. Intuitive Surgical placed 298 systems in the last quarter, compared to 237 systems in the previous year quarter. Our dashboard on Intuitive surgical income offers more details on the business segments.
2) BPA should also be ahead of consensus estimates
Intuitive Surgical’s adjusted earnings per share in the second quarter of 2021 is expected to be $ 3.15 per Trefis analysis, nearly 3% above the consensus estimate of $ 3.06. Intuitive Surgical’s adjusted net income of $ 427 million in the first quarter of 2021 reflects a solid 32% increase from its $ 323 million in the prior year quarter. The increase in profits outpaced revenues due to a 360 basis point expansion in net margins, lower general and administrative expenses as well as lower taxes. We believe that margins will remain strong going forward as the volume of proceedings increases. For the full year 2021, we expect Adjusted EPS will be above $ 13.50 compared to $ 10.14 in 2020.
(3) Estimate of the share price lower than the current market price
Based on our assessment of Intuitive Surgical, with an estimated EPS of around $ 13.50 and a P / E multiple of around 67x in 2021, that translates to a price of $ 910, which is 5% less than the current market price of about $ 954. Investors have assigned a high trading multiple to ISRG stock, given the strong growth in income and earnings in recent years, and this trend is also expected to continue. Note that Intuitive Surgical generates recurring revenue for each system placed, driven by sales of instruments and accessories, as well as services. While a profit overshoot may cause the ISRG stock to show even higher levels, depending on its valuation, we believe it will be prudent for investors to wait for the ISRG stock to decline for buy for better earnings. Our rating – Intuitive Surgical Stock is richly valued at levels of $ 900 – contains more details.
Note: P / E multiples are based on the stock price at the end of the year and reported (or expected) adjusted earnings for the entire year
While ISRG stocks don’t see much of a gain going forward, 2020 has created a lot of price discontinuities that can provide some exciting trading opportunities. For example, you’ll be surprised at how counterintuitive stock valuation is for Pfizer vs Merck.
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