Intuitive Surgical Inc. Stock Buy Recommendation Reiterated (ISRG)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Intuitive Surgical (Nasdaq: ISRG) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+ . The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, compelling growth in net income, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 22.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • INTUITIVE SURGICAL INC has improved earnings per share by 13.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, INTUITIVE SURGICAL INC increased its bottom line by earning $15.96 versus $12.30 in the prior year. This year, the market expects an improvement in earnings ($17.64 versus $15.96).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 15.7% when compared to the same quarter one year prior, going from $151.20 million to $174.90 million.
  • The gross profit margin for INTUITIVE SURGICAL INC is currently very high, coming in at 71.90%. Regardless of ISRG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ISRG's net profit margin of 28.70% significantly outperformed against the industry.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.04% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems for various surgical procedures, including urologic, gynecologic, cardiothoracic, general, and head and neck surgeries. Intuitive Surgical has a market cap of $23.21 billion and is part of the health care sector and health services industry. The company has a P/E ratio of 36.5, above the S&P 500 P/E ratio of 17.7. Shares are up 19% year to date as of the close of trading on Monday.

You can view the full Intuitive Surgical Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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