Intuitive Surgical (ISRG) accounts for ~1.2% of the Health Care Select Sector SPDR Fund (IHI). The company will release its 2Q17 earnings results on July 20, 2017. The company has exceeded analysts’ earnings estimates for the last several quarters. In 1Q17, Intuitive Surgical’s earnings exceeded analysts’ estimates by approximately 2.4%. The stock rose about 5% following the earnings announcement. Let’s look at Wall Street expectations for the company’s earnings in 2Q17.
Analysts estimate that Intuitive Surgical will post 2Q17 EPS (earnings per share) of ~$4.76. In 1Q17, Intuitive Surgical exceeded analysts’ diluted EPS estimate of $4.67 as well as their revenue estimate of ~$674.2 million. In the most recent quarter, peers TransEnterix (TRXC), Stryker (SYK), and Medtronic (MDT) are expected to report EPS growth of 19.5%, 20.0%, and 46.2%, respectively.
Profit margin estimates
For 2Q17, Wall Street analysts estimate a net profit margin of around $179 million. The estimate represents ~25% of the total revenue compared to ~27% in 1Q17.
On a YoY (year-over-year) basis, Intuitive Surgical’s 2Q17 net profit margin is expected to report a decline of around 3%. The company’s gross profit margin for the quarter is expected to be around 70.6%. Intuitive Surgical expects to generate a gross profit margin in the upper half of 69%–71% in 2017. The procedure growth outside the United States is expected to be moderate and see a negative impact from calendar headwinds in 1Q17, as there were fewer operating days in 2Q17 as compared to those in 2Q16.
In the next part, let’s discuss ISRG’s procedure growth trends for 2Q17.