Analysts Think Intuitive Surgical Painted 'Cautious Picture' For Procedure Guidance

Wells Fargo writes that despite the beat in Q1, Intuitive Surgical Inc 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.

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