Intuitive Surgical Inc. (NASDAQ:ISRG) is set to report FQ1 2014 earnings after the market closes on Tuesday, April 22nd. Intuitive Surgical is the producer of the da Vinci Surgical System. The da Vinci system is an innovative healthcare product which helps perform surgeries robotically. Intuitive Surgical stock spiked in early April above $540 before steeply selling off and seeing a price drop of over $125 per share. As of the end of the day on Monday shares were selling as low as $411.10. Wall Street has taken its earnings expectations down dramatically throughout the quarter while the buy side and non-professional investors maintain a significantly higher consensus.
(Click here to see Estimates and Interactive Features for Intuitive Surgical)
The current Wall Street consensus expectation is for Intuitive Surgical to report $3.34 EPS and $494.35M revenue while the current Estimize.com consensus from 16 Buy Side and Independent contributing analysts is $3.43 EPS and $514.63 in revenue. This quarter the buy-side as represented by the Estimize.com community is expecting Intuitive Surgical to beat the Wall Street consensus on both EPS and revenue by a wide margin.
Over the previous 6 quarters the consensus from Estimize.com has been more accurate than Wall Street in forecasting Intuitive Surgical's EPS and revenue 4 times each. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students and non-professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time, but more importantly it does a better job of representing the market's actual expectations.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a much wider than usual differential between the two groups' expectations.
The distribution of estimates published by analysts on the Estimize.com platform range from $3.15 to $3.58 EPS and from $454.35M to $542.00M in revenues. This quarter we're seeing a moderate to large distribution of estimates on VWM.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution of estimates signaling less agreement in the market could mean greater volatility post earnings.
Over the past four months the Wall Street EPS forecast dropped from $3.96 to $3.34 while the Estimize consensus fell slightly from $3.58 to $3.43. Meanwhile the Wall Street revenue consensus plummeted from $551.6M to $494.35M while the Estimize consensus decreased late in the period from $530.68M to $514.63M. Timeliness is correlated with accuracy and downward analyst revisions at the end of the quarter can be a bearish indicator, in this case however the Estimize consensus is still significantly higher than Wall Street's.
The analyst with the highest estimate confidence rating this quarter is turbinecity who projects $3.48 EPS and $525.54M in revenue. turbinecity was our Winter 2014 season winner and is ranked 6th overall among over 4,150 contributing analysts. Over the past 2 years turbinecity has been more accurate than Wall Street in forecasting EPS and revenue an impressive 59% and 55% of the time, respectively. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case turbinecity is making a bullish call expecting Intuitive Surgical to beat both Wall Street and the Estimize community's expectations on EPS and revenue.
Going into the Spring earnings season we have seen Wall Street take its corporate earnings estimates down dramatically. So far the majority of companies including Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), Netflix (NASDAQ:NFLX), Intel (NASDAQ:INTC), Google (NASDAQ:GOOG) (NASDAQ:GOOGL), Yahoo (NASDAQ:YHOO) and SanDisk (NASDAQ:SNDK) have breezed past the bar which Wall Street seems to have set too low. This quarter contributing analysts on the Estimize.com platform are expecting Intuitive Surgical to beat the Wall Street consensus by 9 cents per share in EPS and $20 million in revenues.