NEW YORK (TheStreet) -- Shares of Intuitive Surgical Inc. (ISRG) are down 7.2% to $454.42 after the company estimated lower first quarter 2014 revenue as a result of a 59% decline in sales of its main da Vinci robot system.
Revenue for the first quarter of 2014 is anticipated to be about $465 million, down 24%, compared with $611 million for the first quarter of 2013
Intuitive said, " Preliminary first quarter 2014 da Vinci Surgical Systems revenue is expected to decrease approximately 59% to approximately $106 million compared with $256 million during the first quarter of 2013. Lower systems revenue is due primarily to lower system sales in the U.S" as well as some revenue deferrals.
TheStreet Ratings team rates INTUITIVE SURGICAL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate INTUITIVE SURGICAL INC (ISRG) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, good cash flow from operations, expanding profit margins and increase in stock price during the past year. 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."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ISRG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.48, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, INTUITIVE SURGICAL INC's return on equity exceeds that of both the industry average and the S&P 500.
- Net operating cash flow has slightly increased to $229.10 million or 5.47% when compared to the same quarter last year. In addition, INTUITIVE SURGICAL INC has also modestly surpassed the industry average cash flow growth rate of 3.94%.
- The gross profit margin for INTUITIVE SURGICAL INC is currently very high, coming in at 72.21%. 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 28.84% significantly outperformed against the industry.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: ISRG Ratings Report