Intuitive Surgical sheds over 10% most in over two years despite earnings beat

Apr. 22, 2022 12:58 PM ETIntuitive Surgical, Inc. (ISRG)SYK, GKOS, JNJBy: Dulan Lokuwithana, SA News Editor14 Comments

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The shares of Intuitive Surgical (NASDAQ:ISRG) have recorded the worst intraday decline since March 2020 on Friday despite better than expected financials reported by the maker of robotic surgical systems for 1Q 2022 yesterday after the close.

During the period, revenue growth slowed to ~15% YoY from ~17% and ~30% YoY in 4Q 2021 and 3Q 2021, respectively. da Vinci Surgical System installed base improved 13% YoY in 1Q to 6,920 compared to 12% in the preceding quarter.

The Sunnyvale, California-based company “handily beat” on its most important measure of procedure growth, Raymond James analyst Jayson Bedford wrote in response. However, “the lack of follow-through on the procedure guide and the commentary around a potentially softer U.S. capital pipeline could weigh on sentiment,” he added, according to Bloomberg. Bedford, who has an Outperform rating on Intuitive Surgical (ISRG), trimmed the price target to $330 from $334 per share.

Evercore ISI, with an In-Line rating on the stock, cut the price target to $280 from $294 per share. “ISRG made cautious comments, noting that it had seen some slowdown in early contracting processes,” the analyst Vijay Kumar wrote.

Meanwhile, lowering the per share target to $355 from $360, Truist Securities urged investors to buy the stock on the dip. While the management’s “cautious cap-ex outlook commentary could temper enthusiasm, we would recommend buying any stock pullbacks,” the analyst Richard Newitter argued.

He notes that the company’s “accelerating procedure growth/upside” is the main area of focus as the firm reiterates the Buy rating on the stock.

The rivals of Intuitive Surgical (ISRG) in the MedTech space have also joined the selloff. Notable decliners include Stryker (SYK) and Glaukos Corporation (GKOS).

Today's weakness comes close on the heels of the subsector’s outperformance early this week in reaction to better than expected Q1 2022 sales reported by Johnson & Johnson (JNJ) for its MedTech segment.