Intuitive Surgical said it plans to launch a new da Vinci robotic surgery system this year. ISRG stock jumped to another high before giving up gains Wednesday.
The Street has long wondered when Intuitive Surgical would announce its next system. Late Tuesday, the company said it submitted its request for Food and Drug Administration approval of the da Vinci 5 system in August. This puts the potential launch date in April, Evercore ISI analyst Vijay Kumar said in a report.
Kumar sees a potential for near-term disruption as customers wait for the new system to launch. Further, manufacturing constraints could slow the launch. But William Blair analyst Brandon Vazquez was more bullish on Intuitive's prospects.
"Details on the system are light, but management pointed to 'hundreds' of design changes and 10,000 times the processing power," he said in a report. "We believe it is likely the new system can help the company reach some of the incremental 14 million soft tissue procedures (done) and lay the groundwork for more advanced software features."
Just after the stock market opened, ISRG stock rose 3.4% to 384. Shares edged into a profit-taking zone, which runs from 381.91 to 397.83, according to MarketSmith.com. Intuitive Surgical stock broke out a cup-with-handle base last month. But ISRG stock reversed course, sliding nearly 0.4% to close at 370.07.
Will ISRG Stock Continue Rising?
There were few surprises in Intuitive Surgical's financial announcement late Tuesday. The company had already preannounced $1.93 billion in fourth-quarter sales, up 17%. Adjusted earnings — which were not part of the preannouncement — rose 30% to $1.60 a share. That topped forecasts for $1.48.
William Blair's Vazquez noted the earnings beat was largely on the back of tax reserves that helped offset headwinds from research and development and manufacturing investments. Both are expected to be continuing headwinds in 2024.
The company reiterated its outlook for 13% to 16% growth in procedures using the da Vinci robotic surgery system this year. Vazquez says the guidance remains "achievable if not conservative." And the upcoming da Vinci 5 launch could stoke interest from hospitals looking to increase procedures "without concerns around purchasing a soon-to-be obsolete system," he said.
Additional $20 Million Market
He estimates an additional $20 million total addressable market for Intuitive Surgical if it can break into the incremental 14 million soft tissue procedures. But Evercore's Kumar is less certain.
"We are not sure if new procedures are being addressed out of the gate," Kumar said. At a recent health care conference, Intuitive Surgical raised its near-term procedure opportunity to 7 million, up by 1 million from its previous view. "We are not sure if that is tied to lung biopsy or potential new procedures opened by da Vinci 5."
Further, there is a potential for competition down the road, he said. Privately held Moon Surgical, Medtronic and Johnson & Johnson are all looking to enter the robotic surgery market.
Kumar kept his in-line rating on ISRG stock, but raised his price target to 385 from 335.
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