JMP Securities is out with a downgrade on Intuitive Surgical (NASDAQ:ISRG) taking their rating to Market Perform from Outperform.
Following the rebound in ISRG shares over the past month (currently trading at 24.5x JMP/Street 2010 EPS estimates), they do not expect Intuitive shares to outperform the market over the next 6-12 months, as they believe Intuitive’s top line growth through 2009 will fall in-line with reset expectations following 1Q09 earnings April 16 (consensus sales for 2009 remained around $906m while low/high Street estimates converged). Firm continues to forecast 6% top line growth for Intuitive in 2009, as growth in recurring revenue (20% growth in instruments/accessories and 34% growth in services/training) is offset by an 11% decline in da Vinci system sales under the constrained hospital capex spending environment. Additionally, while they continue to believe that Intuitive is well positioned for growth long term, as they believe the da Vinci system and procedure markets are large and underpenetrated, their forecasts for Intuitive to rebound to double-digit top line and EPS growth in 2010 is predicated on the hospital capex spending environment improving heading into 2010; they are now less confident about the timing of a recovery following the second AmericanHospital Association (AHA) report on the economy’s impact on hospitals published Monday.
JMP notes they had hoped to see from the follow-up AHA survey a stable outlook on hospital capex spending relative to the November 2008 survey, but they believe this outlook is more cautious.
Notablecalls: Given the recent short squeeze induced run-up in ISRG shares, I suspect the call will cause some selling pressure. While basically a valuation call, I just don't see people wanting to step in front of the pullback until we reach $130-$120 levels.
I see ISRG going below $140 level today.
Note JMP isn't alone in this - I see other firms out cautious on the name this AM
Following the rebound in ISRG shares over the past month (currently trading at 24.5x JMP/Street 2010 EPS estimates), they do not expect Intuitive shares to outperform the market over the next 6-12 months, as they believe Intuitive’s top line growth through 2009 will fall in-line with reset expectations following 1Q09 earnings April 16 (consensus sales for 2009 remained around $906m while low/high Street estimates converged). Firm continues to forecast 6% top line growth for Intuitive in 2009, as growth in recurring revenue (20% growth in instruments/accessories and 34% growth in services/training) is offset by an 11% decline in da Vinci system sales under the constrained hospital capex spending environment. Additionally, while they continue to believe that Intuitive is well positioned for growth long term, as they believe the da Vinci system and procedure markets are large and underpenetrated, their forecasts for Intuitive to rebound to double-digit top line and EPS growth in 2010 is predicated on the hospital capex spending environment improving heading into 2010; they are now less confident about the timing of a recovery following the second AmericanHospital Association (AHA) report on the economy’s impact on hospitals published Monday.
JMP notes they had hoped to see from the follow-up AHA survey a stable outlook on hospital capex spending relative to the November 2008 survey, but they believe this outlook is more cautious.
Notablecalls: Given the recent short squeeze induced run-up in ISRG shares, I suspect the call will cause some selling pressure. While basically a valuation call, I just don't see people wanting to step in front of the pullback until we reach $130-$120 levels.
I see ISRG going below $140 level today.
Note JMP isn't alone in this - I see other firms out cautious on the name this AM
4 comments:
Tell us something we don't already know.
Lovely comment, Gary!
True value added!
Make sure you come back tomorrow!
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lovely. another big time contributor.
There must be a nest somewhere nearby...
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