Intuitive Surgical, Inc. (NASDAQ: ISRG) May Exceed Wall Street Earnings Estimate For Q4, Results On January 20
Monday, January 10, 2011 5:31 PM

Sunnyvale, California-based medical technology company, Intuitive Surgical, Inc. (NASDAQ: ISRG) is expected to report its Q4 FY 2010 earnings on January 20, 2011. In the last four quarters, the company's reported EPS exceeded analysts' consensus estimates by margins in the range of 1.90 percent to 26.60 percent.

Intuitive Surgical, Inc. (Intuitive Surgical) is engaged in the designing, manufacturing and marketing of da Vinci Surgical Systems, EndoWrist instruments, and surgical accessories. The Company's da Vinci Surgical Systems consist of a surgeon's console, or consoles, a patient-side cart and a vision system. The da Vinci Surgical System translates a surgeon's hand movements at the controls into corresponding mirco-movements of surgical instruments positioned inside a patient on the operating table, allowing for precision movement and fine surgical manipulation. The company earned $1 billion in revenue and $751 million in net income in FY 2009.

In the third quarter ending September 30, 2010, Intuitive Surgical reported revenue of $344 million, up from $280 million for the third quarter of FY 2009. Third quarter of 2010 revenue growth was driven by continued robotic procedure adoption and higher da Vinci Surgical System sales. Third quarter of 2010 net income was $87 million, or $2.14 per diluted share, compared with $65 million, or $1.64 per diluted share for the third quarter of 2009. Intuitive Surgical ended the third quarter of 2010 with cash, cash equivalents and investments of $1.6 billion, up $280 million from September 30, 2009.

For fourth quarter, analysts' EPS estimates range from the low of $2.05 to $2.35 per share, compared to consensus estimate of $2.24 per share or $1.95 in the year ago quarter. For fourth quarter, analysts' revenue estimates range from a low of $344.20 million to a high of $379.40 million, compared to a consensus estimate of $368.31 million or $323.04 million in the same quarter a year ago. For the quarter ending December 31, 2010, the consensus EPS forecast has been downgraded to $2.24 per share a week ago from $2.27 per share estimated 90 days ago. However, I am positive on ISRG's push into new procedures, which would help reduce its reliance on prostatectomies, the growth of which has slowed in the U.S. But I caution ISRG faces a challenging capital equipment market in Europe. In the last 52 weeks, the stock has been trading in the range of $265.56 and $393.92. The stock closed with a gain of 1.93 points or 0.71 percent to settle at $273.63 on January 5, 2010. I forecast FY2011 EPS at $10.30 per share and based on this estimate, I set a one year target price of $320. The target price estimate also takes into account the dilution effect of stock options granted and likely to be granted during FY2011.



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