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Will Instruments Drive Intuitive Surgical (ISRG) Q1 Earnings?

Zacks Equity Research

Intuitive Surgical, Inc. ISRG is expected to release first-quarter 2019 results on Apr 18, after market close. The company expects steady growth in the Instruments and Accessories segment.

Revenues from other segments are likely to bolster the to-be-reported quarter results.

Which Way Are Estimates Treading?

For the first quarter, the Zacks Consensus Estimate for revenues is pinned at $980.4 million, indicating a year-over-year increase of 15.7%. The same for earnings is pegged at $2.70, reflecting a 10.7% decline year over year.

Intuitive Surgical, Inc. Price and EPS Surprise

Intuitive Surgical, Inc. Price and EPS Surprise | Intuitive Surgical, Inc. Quote

Let’s delve deeper.

Instruments & Accessories — A Key Catalyst

The Instruments and Accessories segment is expected to see a solid first quarter. Not to forget, the segment (contributing 51.4% to total revenues) performed impressively in the fourth quarter of 2018 as well, registering 18% year-over-year growth.

Markedly, the flagship da Vinci surgical system continues to be a revenue driver for the segment.  In the fourth quarter, da Vinci procedures grew approximately 13% from the year-ago quarter. Further, the company plans to broaden the launch of its SureForm 60-millimeter stapler for da Vinci in the first half of 2019.

It is encouraging to note that, the Zacks Consensus Estimate for Instruments & Accessories’ first-quarter revenues is pegged at $540 million, mirroring a year-over-year increase of 17.4%.

Other Factors at Play

Revenues from other two segments — Systems and Services — are also expected to boost first-quarter results on steady progress in the imaging and reality programs. In the last reported quarter, Systems contributed 32.4% to net sales, while Services accounted for 15.9%.

For the quarter to be reported, the Zacks Consensus Estimate for Services stands at $262 million, up 11.5% year over year. The same for Services is pinned at $176 million, up 15% a year ago.

Notably, the company is focusing on cloud computing and informatics capabilities with a view to deliver programmatic insights to customers using its systems. Per management, Intuitive Surgical’s advanced imaging programs and augmented reality programs are steadily making progress. The company anticipates the first clinical use of its augmented reality program in 2019.

Intuitive Surgical is also eyeing overseas markets for expansion.

Notably, the company has been enhancing investments in China to establish its base through joint ventures in the country. Last December, the company also obtained clearance for the da Vinci Xi Surgical System in China.

What Does Our Model Say?

Per our proven model, a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for an earnings beat. This is exactly the case here as you will see below. You can see the complete list of today’s Zacks #1 Rank stocks here .

Earnings ESP: Intuitive Surgical has an Earnings ESP of +0.96%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Intuitive Surgical carries a Zacks Rank #3.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revision.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

PerkinElmer PKI has an Earnings ESP of +2.64% and a Zacks Rank #3.

Stryker Corporation SYK has an Earnings ESP of +0.13% and a Zacks Rank #3.

ABIOMED ABMD has an Earnings ESP of +0.54% and a Zacks Rank #3.

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