Why Intuitive Surgical, Inc. (NASDAQ: ISRG) stock is going gangbusters today

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Intuitive Surgical, Inc. (NASDAQ: ISRG) stock rose almost 7% on 18th October, 2019 (As of 11:32 am GMT-4; Source: Google finance) after the company posted better than expected results for the third quarter of FY 19 on the back of 19% increase in the third-quarter shipments of its main surgery device from last year.  ISRG reported non-GAAP net income of $409 million for the third quarter compared with $337 million for the third quarter of 2018. The Company has ended the third quarter of 2019 with cash, cash equivalents, and investments of $5.4 billion, which reflects an increase of $282 million during the quarter.

ISRG in the third quarter of FY 19 has reported the adjusted earnings per share of $3.43, strongly beating the analysts’ estimates for the adjusted earnings per share of $2.99, according to Refinitiv. The company had reported the adjusted revenue growth of 23 percent to $1.13 billion in the third quarter of FY 19, beating the analysts’ estimates for revenue of $1.06 billion. The company’s Pro forma gross profit margin was 72% compared to 71.5% in the third quarter last year. Instrument and accessory revenue rose to $606 million, up 25%. Total recurring revenue in third the quarter was $817 million, growing 24% over third quarter of 2018 and representing 72% of total revenue. The company has posted the pro forma operating profit of $462 million in the quarter, which is up 18% from the third quarter of last year.

ISRG has shipped 275 da Vinci Surgical Systems in the third quarter. The robotic-assisted system is used by surgeons to perform minimally invasive procedures and it costs between $500,000 and $2.5 million to the company. Compared to the third quarter of 2018, the systems revenue posted higher system placements, higher ASPs and higher lease-related revenues. ISRG has completed 92 operating lease transactions, which forms 33% of total placements compared to 25% of total placements in the third quarter of 2018, and 32% of total placements last quarter.

For the third quarter, the global procedure grew about 20%, due to an increase of approximately a surgery day relative to Q3 of 2018. Growth again centered on general surgery in the United States with positive contributions to the global growth rate from Germany, Korea and Japan. China procedure growth continues to be limited by installed base growth. Total procedure growth in China is responding positively considering the release of system quota and subsequent placements. In the United States, the year-over-year procedure growth for the third quarter was 18%.

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