- Wells Fargo writes that despite the beat in Q1, Intuitive Surgical Inc (NASDAQ:ISRG) sounded cautious on U.S. capital placements, given rising interest rates and inflationary pressure at hospitals.
- "We think this commentary was partly driven by the need to recalibrate Street models for fewer trade-ins as the number of legacy Si systems declines. Overall, it was a solid quarter in our view," the analysts note.
- ISRG expects worldwide da Vinci procedures to grow 12-16% in 2022. Wells Fargo says that the guidance does not contemplate material supply chain disruptions throughout 2022.
- In Q2, Y/Y procedure growth rates are expected to be lower than in recent quarters, given that 2Q21 reflected a strong recovery in procedures as COVID began to subside.
- Wells Fargo cut the price target from $350 to $339 (33% upside) with an Overweight rating.
- Raymond James says that despite the Q1 beat, the lack of follow-through on the procedure guide and the commentary around a potentially softer U.S. capital pipeline could weigh on sentiment.
- "Investors were likely expecting a cleaner 'beat and raise,' and we effectively got a "beat," say analysts.
- The analysts note no actual follow-through over the next three quarters for procedures growth.
- "With the procedure environment improving, we have a tough time believing this guidance is not beatable, assuming no additional COVID waves," analysts tell investors.
- ISRG speculated that the near-term softness in the U.S. capital pipeline is due to a potential pull-forward of demand in 4Q or tightening capital budgets at U.S. hospitals.
- The analysts suggested a robust capital environment and are a bit surprised by the commentary and are inclined to view this commentary as conservative.
- Raymond James cut the price target from $334 to $330 (29% upside) with an Outperform rating.
- Price Action: ISRG shares are down 13.21% at $255.65 during the market session on the last check Friday.
