On Friday, Jefferies maintained a Hold rating on Intuitive Surgical (NASDAQ:) but increased the stock price target to $375 from $365. The adjustment follows Intuitive Surgical’s announcement of its first-quarter financial results for 2024, which showed revenues of $1.89 billion, a growth of 11% compared to consensus estimates of $1.87 billion.
The company’s earnings per share (EPS) also exceeded expectations at $1.50, representing a 22% increase over the predicted $1.42.
Intuitive Surgical’s procedure growth was noted at 16%, which, despite being a challenging comparison to previous periods, was considered satisfactory relative to investor anticipations. The company has also revised its procedure guidance upwards by 1%, now expecting a growth range of 14-17%, while keeping other elements of its financial guidance unchanged.
The earnings call highlighted the enthusiasm surrounding the unveiling of Intuitive Surgical’s new da Vinci 5 (DV5) system earlier this week. The firm’s analysts recognize the market’s positive reception of the new system, although they believe the current valuation already reflects much of this optimism.
The decision to maintain the Hold rating by Jefferies is based on the firm’s assessment of Intuitive Surgical’s valuation. Despite this cautious stance, the firm acknowledges the need to revise its financial projections and price target upward, in light of the company’s first-quarter performance and the updated procedure guidance.
InvestingPro Insights
For investors closely monitoring Intuitive Surgical (NASDAQ:ISRG), real-time data from InvestingPro provides a deeper understanding of the company’s financial health and market position. With a substantial market capitalization of $132.08 billion and a high P/E ratio of 72.81, the company’s valuation reflects its leading status in the medical technology sector.
Notably, the P/E ratio has remained elevated even when adjusted for the last twelve months as of Q4 2023, sitting at 73.24. This suggests that investors are willing to pay a premium for Intuitive Surgical’s shares, possibly due to their confidence in the company’s growth prospects and innovative product offerings like the new da Vinci 5 system.
InvestingPro Tips highlight that Intuitive Surgical trades at a high earnings multiple and possesses a PEG ratio of 1.95, which might indicate that the stock’s price is high relative to near-term earnings growth.
Nevertheless, the company demonstrates solid financial fundamentals, with a robust gross profit margin of 66.39% and an operating income margin of 24.8% for the last twelve months as of Q4 2023. These margins underscore Intuitive Surgical’s ability to translate revenues into profits efficiently.
While the stock has experienced a 6-month price total return of 36.27%, reflecting a significant uptick, the company does not pay dividends, which may be a consideration for income-focused investors. For those interested in additional insights, there are 13 more InvestingPro Tips available for Intuitive Surgical, offering a comprehensive analysis that could guide investment decisions.
To explore these further, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.