On Friday, Oppenheimer maintained a Perform rating on Intuitive Surgical shares (NASDAQ:ISRG), following the company's release of its fourth-quarter results for 2024. The medical device company, currently valued at $217 billion and rated "GREAT" by InvestingPro's Financial Health Score, reported a GAAP earnings per share (EPS) of $1.88, surpassing both Oppenheimer's estimate of $1.64 and the consensus estimate of $1.42.
Intuitive Surgical's average selling price (ASP) for its systems rose to $1.59 million, driven by a higher mix of its advanced da Vinci (EPA:SGEF) 5 (dV5) surgical systems. This increase was balanced by lower pricing in China. In the United States, the company placed 174 dV5 systems during the fourth quarter, which represented 61% of its total U.S. placements for the period, up from 110 placements in the third quarter. A full-scale launch of the dV5 system is anticipated around mid-year, supporting the company's impressive 14.8% revenue growth over the last twelve months.
Additionally, Intuitive Surgical has secured a significant distribution agreement worth €290 million, which is expected to close by 2026. This deal will enable the company to establish a direct presence in Italy, Spain, and Portugal. The company also received approval for SP thoracic and colorectal indications, which is expected to boost commercial efforts following the approval of the SP-stapler.
Despite these positive developments, Oppenheimer expressed a cautious outlook on the stock. The analyst firm outlined several concerns impacting their stance: the U.S. market for Intuitive Surgical's products appears to be nearing saturation, and the value proposition of the new dV5 system, which is priced at a 30% premium over the company's previous Xi model, remains uncertain. According to InvestingPro analysis, the stock appears overvalued, trading at a P/E ratio of 95.85 and near its 52-week high of $616. Multiple InvestingPro Tips indicate high valuation multiples across various metrics, suggesting that the stock's growth prospects may already be reflected in its price. For deeper insights into ISRG's valuation and growth potential, access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Intuitive Surgical has been the focus of several analyst upgrades following robust fourth-quarter earnings that surpassed expectations. Bernstein has reaffirmed an Outperform rating for Intuitive Surgical, setting a price target of $700. The company's fourth-quarter earnings per share (EPS) showed a 38% year-over-year increase to $2.21, surpassing the consensus estimate by 22%. Truist Securities, Deutsche Bank (ETR:DBKGn), BTIG, and Raymond (NSE:RYMD) James also raised their price targets for the company.
Intuitive Surgical's financial performance in the last quarter was notably strong, with a gross margin of 69.5% and an operating margin of 38.4%. The company's robust margin profile contributed to the impressive quarterly results. The analysts anticipate that Intuitive Surgical's financial metrics will consistently improve over the course of the year.
The company's growth prospects are underpinned by what Bernstein analysts believe are five transformational product cycles poised to accelerate in the near future. The analysts' optimistic scenario suggests that Intuitive Surgical's EPS could reach $11.50 by 2026.
Despite predicted headwinds, including a forecasted impact on currency exchange revenue and a higher tax rate, analysts remain optimistic about Intuitive Surgical's growth prospects. The company's robust revenue growth, impressive financial health score, and anticipated launch of the new D5 system are contributing factors to this optimism. These are the recent developments in the company's journey.
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