Despite Capital Budget Softness, Long Term Opportunity Remains Intact For Intuitive Surgical: Raymond James Analyst

Yesterday, Intuitive Surgical Inc ISRG reported lower-than-expected Q2 earnings.
Raymond James writes, "we were worried about the capital equipment environment, we admittedly did not think ISRG's 2Q print would be the 'event' that fully triggered the concern."
The analysts believe slowing replacement cycle, supply chain issues, and constrained U.S. hospital budgets will temper system placements, thus driving an estimate reset.
The absence of Systems guidance, the uncertainty around the duration of the capital equipment slowdown, and the lack of visibility into the timing of a new system will all weigh on sentiment.
Raymond James lowered the price target to $255 from $294, with Outperform rating unchanged.
Wells Fargo says that ISRG continued to sound cautious about the U.S. capital environment, indicating that the softening U.S. capital pipeline in Q1 persisted in Q2.
Overall, Wells Fargo continues to view ISRG's fundamentals as strong despite slowing trade-ins from the prior generation Si to the current Xi and the soft capital environment.
RBC Capital says that system utilization has remained strong despite tightened capital budgeting.
On procedures, ISRG is seeing a healthy pace of utilization as customers seek efficiency gains on existing capital.
RBC has lowered the price target to $285 from $340.
Price Action: ISRG shares are down 6.65% at $209.81 during the market session on the last check Friday.

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