Friday, October 27, 2006

Calls of Note Part 1

- Deutsche Bank comments on Intuitive Surgical (NASDAQ:ISRG) noting the co delivered upside across the board for 3Q. Management continues to execute seamlessly in capturing the robotic surgery market opportunity with uptake increasing across specialties. Though urology remains the biggest growth driver for the company, uptake in gynecology remains swift and the firm believes continued momentum in this arena will be critical to growth in system placements over the next several quarters.

ISRG reported 3Q revenue of $95.8m, +57% yr/yr and comfortably ahead of DB forecast and consensus, both at $88m, despite a typically slow 3Q. EPS were $0.45, well ahead of forecast and consensus. In light of the 3Q upside, management once again raised guidance, and the firm has increased their forecasts.

The company sold 42 net new da Vinci robots in the quarter, exceeding DB forecast of 40 systems. The company sold 4 upgrades (hospital converting older system to the newer da Vinci S). A growing number of hospitals are purchasing second systems (12 in 3Q), reflecting strong utilization trends and expansion into new procedures at these centers. During the quarter, the UPenn hospital system purchased three systems (total of four at hospital) and Beaumont Hospital bought two units (total of three at hospital) in their efforts to establish robotic surgery "centers of excellence", and the firm would not be surprised to see other institutions follow suit. Internationally, the company continues to make inroads in large markets, having placed the first da Vinci system in mainland China during 3Q.

Maintains $140 tgt on Buy rating.

Notablecalls: Correct me if I'm wrong but didn't ISRG make $0.44 in EPS in Q206 and $0.55 in Q305? That doesn't make the $0.45 headline number too flashy, does it? Guess that's the main reason the stock failed to hold the initial gains in after hrs trade.

No comments: