Analysts Constructive On Intuitive Surgical Following Solid Quarter

Intuitive Surgical, Inc. ISRG shares are sharply higher Friday following strong quarterly results.

The Analysts

Morgan Stanley analyst David Lewis reiterated an Overweight rating and $620 price target for Intuitive Surgical. (See his track record here)

Wells Fargo analyst Larry Biegelsen reiterated an Outperform rating and $620 price target. (See his track record here)

Morgan Stanley: We Remain Very Constructive On Intuitive

Intuitive Surgical's results were better than expected, thanks to an acceleration in procedures, Lewis said in a note. The strong showing has come despite competitive fears.

Systems average selling price improved sequentially to the highest mark on the year, the analyst noted.

Despite the third-quarter seasonality, placements in Europe recovered. Lewis said with these, all of first-half concerns are virtually resolved.

The analyst expects fourth-quarter procedure growth of 17.5%, which he feels could prove conservative, as it represented a 100 basis-points of momentum deceleration.

Morgan Stanley said it remains very constructive on Intuitive Surgical, as "Phase 1 is still driving significant growth, the company is just scratching the surface on Phase 2, and it is building the foundation for Phase 3."

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Wells Fargo: ‘Solid Quarter Driven by Strong Q3 Results'

The robust third-quarter results were orchestrated by a number of factors, including higher procedure volume growth, systems shipped and ASPs, as well as higher gross margins and a lower effective tax rate, Biegelsen said.

The company raised its procedure volume growth guidance as well gross margin guidance. Wells Fargo raised its 2019 and 2020 estimates.

"Overall, it was a solid quarter and driven by strong Q3 results," the analyst said.

Price Action

Intuitive Surgical shares were rallying 5.3% to $557.51 at time of publication.