Intuitive Surgical Inc. (ISRG) is scheduled to report their Q1 2010 results after the market closes on April 15, 2010. A strong 4Q09 and reinstated guidance suggests materially improvement visibility into 2010. Gross margin guidance looks conservative considering historically high 4Q09 margins and favorable price/mix shift from Si adoption. SG&A leverage may hit the P&L faster than expected as experienced users require less sales support. Strong procedures growth will help the top line, but may not drive box placements if hospitals increase utilization instead of purchasing new systems.
Intuitive Surgical, Inc. designs and manufactures the da Vinci Surgical System. The da Vinci Surgical System seamlessly translates the surgeon''s natural hand movements on instrument controls at a console into corresponding micromovements of instruments positioned inside the patient through small puncture incisions, or ports. The products provide the surgeon with the range of motion and fine tissue control previously possible only with open surgery, while simultaneously allowing the surgeon to work through small ports.
4Q09 provided strong evidence that visibility has materially improved. Guidance implies a 2010 EPS range of $7.38 to $7.62, comparing favorably to consensus expectations of $6.97. Given strong 4Q09 system placements and procedural trends (particularly in hysterectomy), guidance may be conservative. Procedure growth could reach as high as 37% and system placement growth as much as 20% driving revenue growth of 27% vs. management guidance of 25%. On 9February, 2010 the company announced that fiscal 2010, it expects operating profit numbers to be at around 44% to 45%. According to Reuters Estimates, analysts on an average were expecting the company to report revenue of $1.243 billion for fiscal 2010.
Analyst estimates for Q1 2010 range from a low of $1.33 to a high of $2.02, compared to a consensus estimate of $1.67, with the number of estimates being 15 and the co-efficient variance 9.17. In November 2009, Intuitive Surgical received regulatory (Shonin) approval from the Japanese Ministry of Health, Labor, and Welfare (MHLW) for its da Vinci S System in Japan. During the year ended December 31, 2009, surgeons using its technology completed approximately 205,000 surgical procedures of various types in major hospitals throughout the world.
With the stock closing 0.63% up at $351.75 on April 1, 2010, most analysts' recommend investors to hold the stock due to a possible re-rating mainly attributable to the Japan Import License and Reimbursement [Late 2010] catalyst.
