Intuitive Surgical Inc.

Intuitive Surgical managed an all-around beat in the last quarter with decent revenue and products growth. The new capital installs were quite strong, with customers building their Ion and da Vinci system capabilities. Primarily the margins were pressured by charges taken in its stapling line. A capable product portfolio and strong growth in procedures have supported quite a healthy capital placement quarter. Some supply and manufacturing challenges in the quarter negatively impacted the company’s product margins. The innovation engines and R&D are making great progress with progress in its digital efforts, strength in Ion adoption, and indication expansion for SP and Ion. On a procedure basis, hernia repair, bariatric surgery, and cholecystectomy led their way. On new products and indications, Intuitive Surgical had a productive quarter. It received its CE mark for Ion. In digital, the simulation subscription installed base of the company grew. All major regions of the company performed well and standouts included Italy, Germany, Japan UK, Spain, and India. The Intuitive Hub installed base also grew and utilization during da Vinci cases grew. The company installed its foremost da Vinci SP systems in Japan. It received new indications for SP in the U.S. through a 510(k) clearance in urology. We give Intuitive Surgical a ‘Hold’ rating with a revised target price.