Intuitive Surgical stock reversed lower midmorning Friday — erasing earlier gains — after analysts cautioned its da Vinci 5 launch will be initially slow.
The company won Food and Drug Administration clearance for the new robotic surgery system on March 14. In the two weeks following the FDA's nod, Intuitive Surgical placed eight new systems. The speedy placements suggest da Vinci 5 could be in high demand after this initially "measured" launch.
But Mizuho Securities analyst Anthony Petrone cautioned patience.
"The initial eight da Vinci 5 systems were placed with early positive feedback around the force feedback application designed to reduce tissue trauma among other new design features," he said in a client note. "Despite a strong showing out of the gate, DV5 supply remains constricted, reaffirming that a full-scale launch will likely not come until next year."
On today's stock market, Intuitive Surgical stock 1.7% to 366.34. In earlier action, shares rose as much as 4.3%. But the stock is facing a ceiling at its 50-day moving average, according to MarketSurge.com.
Intuitive Surgical Stock: Earnings And Sales Beat
Overall, Intuitive Surgical earned $1.50 per share, minus some items, on $1.89 billion in sales for the first quarter. Both measures topped forecasts for $1.42 a share and $1.87 billion, respectively. Earnings climbed 22% as sales ramped 11.5% higher.
Notably, the number of procedures performed using its bread-and-butter da Vinci systems grew 16% year over year, beating forecasts for 14.5%, according to FactSet. Intuitive's compound annual growth rate for procedures has reached 17.3% vs. 2019, Evercore ISI analyst Vijay Kumar said in a report. He noted that's an increase from its historical range of 16% to 17%.
For the year, Intuitive Surgical now expects number of procedures to grow 14% to 17%, an increase of 100 basis points from its prior outlook, Kumar said. But there were puts and takes across the procedure growth. Ion, Intuitive's lung biopsy robot, put up a strong showing. But bariatric surgeries are still feeling the squeeze from weight-loss drugs.
"Ion was a standout for us, with procedures growing 90% (recall Ion biopsy has a higher average sales price of more than $3,000 per case)," he said. "On the flip side, bariatric procedures were flat and further decelerated from the second half of 2023 levels."
Some 'Choppiness' But Positives Are Intact
The strong procedure growth translated into bullish sales of one-time instruments and accessories, up 35% to nearly $1.16 billion. Analysts called for a lower $1.15 billion from that segment.
Systems revenue slowed down slightly to $418.2 million. Intuitive Surgical previously cautioned that some customers might hold off on replacing their older systems until the da Vinci 5 is broadly available. Still, even that beat Intuitive Surgical stock analysts' call for $398 million.
William Blair analyst Brandon Vazquez noted Intuitive Surgical is still facing difficult year-over-year comparisons, lessening procedure backlog benefits, competitive pricing pressures in China and some expected "choppiness" of system orders as some customers await the da Vinci 5 launch.
"That said, we believe the positives continue to outweigh the near-term headwinds," he said in a note.
Vazquez reiterated his outperform rating on Intuitive Surgical stock.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
