Because it could go higher

If you wonder if Intuitive surgical NASDAQ: ISRG stocks can trend higher this year, it can. The medical technology industry is growing and Intuitive Surgical is leading the industry and exceeding expectations. The result of the first quarter results is the same as last quarter and last year: the normalization of the industry is compounded by the expansion of the use of DaVinci systems and the deepening of penetration into existing markets. The combination is squeezing profits and profits, leading analysts to raise their targets and paving the way for new stock prices at all-time highs.

Intuitive Surgical had a good quarter

Intuitive Surgical had a strong quarter across the board. The company reports solid double-digit growth above expectations and stronger margins without any impact from COVID. The bottom line is that the business is growing under his influence and unhindered, providing a clear path to improve shareholder value.

The company posted revenue of $1.89 billion, with a year-over-year gain of nearly 12% that beat consensus by 100 basis points. Strength was driven by a 16% increase in procedure volume, aided by a 90% increase in ion bronchoscopy procedures, and a 14% increase in installed machine base, providing leverage for growth. Tools and accessories led revenue growth in the segment, up 18%, but a slight decline in systems offset this. Systems decreased 2% due to end-user mix. Services grew by 10%.

The company has experienced cost pressure along with its growth, but has been able to manage it and capitalize on the bottom line. Cost of revenue grew just 10.2% versus gain of 11.8% and was compounded by similar strength in operating margin. Operating costs increased just 7%, leaving GAAP net income up 53%, GAAP earnings up 51%, and adjusted earnings up 22% and 560 basis points better than reported consensus forecasts from Marketbeat.

Intuitive Surgical provides no guidance but shows momentum and is building leverage. However, during the conference call, company executives mentioned an industry-wide backlog of procedures that is expected to continue producing results this year.

Analysts raise price targets for intuitive surgeries

Analysts liked what they saw in ISRG’s first-quarter earnings report and are issuing favorable revisions. The few tracked by Marketbeat.com include a single price target cut to $440, which is well above current action and consensus. The range of the new targets is from a near-consensus of $375 to $436, assuming an upside of between 1% and 18%. The upper end of the range was also set recently and adds another 600 basis points of upside to the outlook. Analysts rate this stock with a Moderate Buy consensus and have remained firm and consistent in that outlook for more than twelve months.

Domestic sales could be a hindrance to the market. In the first quarter of 2024, insiders sold en masse and may continue to sell as the stock price rises. However, insiders own a small 0.90% stake in the company and participate in the share-based remuneration, so no significant red flags are raised given the quality of the results. Institutions would be a more substantial concern; they own about 84% of the shares, but their activity is light and has helped support the market over the past year.

Intuitive surgical stock falls into support

Intuitive Surgical’s stock price recently hit a new high and is now retreating to retest support at the critical level. Assuming the market takes advantage of the opportunity, ISRG stock should start rebounding soon. The critical support target is near the previous highs of $358, within striking distance. If the market does not support this stock at $358, it could break below the critical level and drop to $300 before rebounding.

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