Intuitive Surgical, Inc. (NASDAQ:ISRG) shareholders are probably feeling a little disappointed, since its shares fell 4.4% to US$744 in the week after its latest yearly results. The result was positive overall - although revenues of US$4.4b were in line with what the analysts predicted, Intuitive Surgical surprised by delivering a statutory profit of US$8.82 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Intuitive Surgical's 18 analysts are now forecasting revenues of US$4.95b in 2021. This would be a notable 14% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 7.9% to US$9.78. In the lead-up to this report, the analysts had been modelling revenues of US$5.00b and earnings per share (EPS) of US$11.04 in 2021. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
The consensus price target held steady at US$773, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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. Currently, the most bullish analyst values Intuitive Surgical at US$910 per share, while the most bearish prices it at US$410. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Intuitive Surgical'shistorical trends, as next year's 14% revenue growth is roughly in line with 14% annual revenue growth over the past five years. Compare this with the wider industry, which analyst estimates (in aggregate) suggest will see revenues grow 9.8% next year. So although Intuitive Surgical is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$773, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Intuitive Surgical going out to 2025, and you can see them free on our platform here.
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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