ISRG Likely to Beat Q4 Expectations: How to Play the Stock?

Core Viewpoint - Intuitive Surgical, Inc. (ISRG) is expected to report strong fourth-quarter 2024 earnings, with sales projected at $2.41 billion, reflecting a 25$1.77 [1][5]. Earnings Estimates - The Zacks Consensus Estimate for ISRG's sales and earnings is $2.41 billion and$1.77 per share, respectively [1]. - Earnings per share estimates for 2024 and 2025 have increased to $6.67 and$7.66, respectively, over the past 30 days [1]. Recent Performance - In the last reported quarter, ISRG achieved an earnings surprise of 11.52%, beating estimates in each of the trailing four quarters with an average surprise of 10.96% [3]. Earnings Prediction - The company has an Earnings ESP of 7.29% and a Zacks Rank of 3 (Hold), indicating a favorable outlook for an earnings beat [4]. Sales Growth Factors - Preliminary sales of $2.41 billion for Q4 2024 indicate a 25$1.41 billion, up 23% year over year, with da Vinci procedures increasing by 18% [6]. Market Trends - General surgery procedures in the U.S. and cancer procedures in ex-U.S. markets have contributed to procedure growth [9]. - China's recovery post-COVID and rising adoption in Japan and India are expected to boost sales [10]. System Placements - ISRG placed 174 da Vinci 5 systems in the U.S., reflecting nearly 60% sequential growth [11]. - Strong system placements in the Asia-Pacific region are also anticipated, although placements in China may face challenges [11]. Margin Expectations - Margins are likely to improve due to cost reductions and lower freight rates, despite an expected increase in depreciation expenses [13]. Stock Performance - ISRG shares have appreciated 31.3% over the past six months, outperforming the industry and S&P 500 [14]. - The current forward 12-month P/E ratio is 93.03X, significantly higher than the industry average of 33.14X, indicating a premium valuation [17]. Investment Outlook - Despite high valuation, ISRG is expected to continue strong performance driven by da Vinci procedure volume growth and improved system placements [20]. - The launch of new systems in Europe and the U.S. is expected to drive further growth, although challenges in bariatric procedures and China may offset some gains [21].