Should ISRG Stock Be Part of Your Portfolio Ahead of Q3 Earnings?

Core Viewpoint - Intuitive Surgical, Inc. (ISRG) is expected to report third-quarter 2024 earnings on October 17, with sales and earnings estimates at $2.02 billion and $1.65 per share respectively, while earnings per share estimates for 2024 and 2025 have remained stable at $6.67 and $7.66 over the past 60 days [1][2] Estimate Movement - The earnings surprise for ISRG in the last reported quarter was 16.34%, with an average surprise of 8.97% over the trailing four quarters [2][3] Factors to Note - ISRG reported sales of $3.27 billion in the first half of 2024, reflecting a year-over-year growth of 13.5%, driven by strong procedure performance and capital placements [5] - The Instruments & Accessories segment is expected to report robust results due to strong da Vinci procedure growth, with a 17% increase in procedures during the second quarter [5][6] - The revenue per procedure increased to approximately $1,800, up about $20 sequentially, although unfavorable currency movements may offset some gains [6] - Sales growth is likely to be supported by China's recovery and rising adoption in Japan and India [6][7] - The Systems segment is expected to reflect strong adoption of the newly launched da Vinci 5, with 70 systems placed in the U.S. during the second quarter [7][8] - The Services segment is anticipated to show strong adoption of digital products and services [8] Price Performance & Valuation - ISRG shares have appreciated 28.8% in the past six months, outperforming the industry growth of 4.2% and the S&P 500 Index's rise of 15% [9] - Currently, ISRG is trading at a forward 12-month P/E of 65.48X, compared to the industry's 32.6X, although this valuation has decreased from a high of 87.37X [10] Investment Thesis - Continued growth in da Vinci procedure volume and strong Ion procedure growth are expected to drive ISRG's performance for the rest of 2024 [11] - The launch of da Vinci SP in Europe and da Vinci 5 in the U.S. is anticipated to boost system placements [11] Conclusion - ISRG's unfavorable Earnings ESP suggests no significant movement post-earnings results, and while the company has a favorable Zacks Rank, its high valuation may deter immediate investment [12][13]