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What to Expect from Intuitive Surgical's 3Q17 Earnings

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What to Expect from Intuitive Surgical's 3Q17 Earnings PART 2 OF 3

Intuitive Surgical’s 3Q17 Revenue: Can It Beat the Estimates?

Intuitive Surgical’s revenue estimates

On October 19, 2017, Intuitive Surgical (ISRG) plans to announce its 3Q17 earnings results. According to its recent quarterly results, the company has surpassed Wall Street analysts’ revenue estimates in recent quarters. You can see a comparison of the company’s actual reported revenues and analysts’ estimates in the graph below.

Intuitive Surgical’s 3Q17 Revenue: Can It Beat the Estimates?

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According to recent Wall Street analysts’ estimates, Intuitive Surgical is expected to report revenues of $753.2 million in 3Q17. That represents a YoY (year-over-year) sales growth of 10.3%. In 2Q17, Intuitive Surgical’s YoY sales growth was 13.0%. The dollar revenues in the quarter were reported at $756.20 million. The sales growth was primarily driven by growth in the company’s recurring revenue stream supported by the continued momentum in the procedure volumes growth.

However, Intuitive Surgical expects its procedure volumes to moderate in the second half of 2017. Contributions from China and Japan are also expected to be weak since the company still hasn’t obtained a new quota for additional system placements in China and additional reimbursements for procedures in Japan. The company also expects its average system selling price to be lower in the second half of 2017.

Major competitors

Intuitive Surgical is currently the largest player in the robotics surgery market with the majority of the market share amid competition from some smaller niche players. However, competition is expected to get tougher in the medium term as Medtronic (MDT), TransEnterix (TRXC), Verb Surgical,1 and Johnson & Johnson (JNJ) are preparing to enter this market space.

Investors can consider investing in the Vanguard S&P 500 ETF (VOO) for diversified exposure to Intuitive Surgical. ISRG accounts for ~0.18% of VOO’s total holdings.

  1. a joint venture of Alphabet (GOOGL)
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