Intuitive Surgical, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

A week ago, Intuitive Surgical, Inc. (NASDAQ:ISRG) came out with a strong set of third-quarter numbers that could potentially lead to a re-rate of the stock. Intuitive Surgical delivered a significant beat to revenue and earnings per share (EPS) expectations, with sales hitting US$1.1b, some 11% above indicated. Statutory EPS were US$2.60, an impressive 76% ahead of forecasts. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Intuitive Surgical

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Taking into account the latest results, the consensus forecast from Intuitive Surgical's 20 analysts is for revenues of US$5.07b in 2021, which would reflect a meaningful 18% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 23% to US$11.15. Before this earnings report, the analysts had been forecasting revenues of US$5.02b and earnings per share (EPS) of US$10.59 in 2021. So the consensus seems to have become somewhat more optimistic on Intuitive Surgical's earnings potential following these results.

The consensus price target rose 5.4% to US$726, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Intuitive Surgical, with the most bullish analyst valuing it at US$910 and the most bearish at US$365 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Intuitive Surgical's past performance and to peers in the same industry. It's clear from the latest estimates that Intuitive Surgical's rate of growth is expected to accelerate meaningfully, with the forecast 18% revenue growth noticeably faster than its historical growth of 14%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 10% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Intuitive Surgical to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Intuitive Surgical's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Intuitive Surgical analysts - going out to 2024, and you can see them free on our platform here.

You can also see our analysis of Intuitive Surgical's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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