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How Intuitive’s Bottom Line Is Expected to Look in Q3 2018

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Oct. 10 2018, Updated 9:00 a.m. ET

Operational performance

Intuitive Surgical’s (ISRG) cost of goods sold is expected to rise 16.82% from $227.5 million in the third quarter of 2017 to $265.76 million in the third quarter of 2018.

The company’s gross income is expected to rise 11.28% from $578.6 million in the third quarter of 2017 to $643.85 million in the third quarter of 2018, indicating a contraction in its gross margin from 71.78% in the third quarter of 2017 to 70.91% in the third quarter of 2018. The growth in Intuitive’s gross income is expected to be at its slowest pace in the last four quarters, during which it’s ranged from 15.9% to 24.9%.

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In the third quarter, Intuitive Surgical is expected to incur selling, general, and administrative expenses of $207.11 million compared to $204.8 million in the third quarter of 2017, reflecting a potential increase of 1.13%. On the other hand, the company’s research and development expenses are expected to fall 1.3% from $83.4 million in the third quarter of 2017 to $82.32 million in the third quarter of 2018.

Bottom line

Intuitive Surgical is expected to report net income of $258.28 million in the third quarter compared to net income of $297.5 million in the third quarter of 2017, indicating a contraction of 13.18% in the company’s net margins. This net income translates to an expected net income per share of $2.21 in the third quarter compared to a net income per share of $2.55 in the third quarter of 2017.

Intuitive Surgical’s current ratio, a metric of how effectively a company can meet its short-term obligations, stands at 6.0. In comparison, the current ratios of its peers Johnson & Johnson (JNJ), Medtronic (MDT), Stryker (SYK), and Zimmer Biomet Holdings (ZBH) stand at 1.70, 2.50, 1.80, and 2.40, respectively.

We’ll take a look at Intuitive Surgical’s valuation metrics and analysts’ recommendations for the stock in the next article.

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