Intuitive Surgical earnings release and call disappoint analysts

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Analysts were downbeat following Intuitive Surgical’s (NASDAQ:ISRG) latest earnings release, which saw it miss earnings and revenue consensus expectations.

BTIG analysts cut their price target on the stock to $279 from $316, maintaining a Buy rating. They told investors in a note that the company’s Multiport “head-fake” tanked the company’s shares midway through its earnings call.

The analysts explained that expectations for a next-gen multiport robotic system have been building for multiple quarters, and while ISRG had previously not explicitly commented on this, the company, on its earnings call, gave the most concrete evidence that ISRG is working on a next-generation multiport system. However, rather than confirming expectations, management pushed out timing beyond FY23, said the analysts, who added that investors were clearly hoping for an FY23 launch.

“Shares tanked, and we’re scratching our heads a bit as we try to understand ISRG’s thinking,” the analysts wrote. ISRG shares are currently down more than 5%.

Commented specifically on the company’s earnings, the analysts stated: “Against this backdrop, ISRG’s FY23 OpEx guidance (~9% – 13% Y/Y growth) is moderating vs. FY22 (OpEx grew 23%) and EPS will grow finally. Further with improving procedure growth in select OUS markets, improving utilization of Ion and Sp, and further productivity gains to be had on Xi, we think ISRG could see procedure guidance improve through FY23.”

Stifel analysts also maintained a Buy rating on ISRG, lowering the firm’s price target on the stock to $285 from $300 per share.

The analysts said in a note that the firm’s new $6.85B 2023 top-line projection falls below the prior Stifel/Consensus ~$7B due to lingering China COVID headwinds and “historically responsible'” start-of-year guide.

“Our new $5.25 EPS projection also falls below prior Stifel/Consensus $5.50/$5.40 per share. The 2023 year is also likely to start slowly for Intuitive as the first quarter faces challenges from lingering China Covid procedure headwinds, ongoing supply chain pressures, and higher cost inventory flowing through the 1H23 COGS line,” stated the analysts.

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