- The latest earnings miss ruined intuitive investor optimism, shedding shares over the past day.
- However, the company still presented a crucial growth signal.
Intuitive Surgical (ISRG) shares dropped about 9.5% following quarterly results missed estimates. Meanwhile, the robotic surgery firm recorded a drop in systems placements. Intuitive hasn’t performed at its best even before the report. ISGR has dropped 40% YTD. Investors have been concerned about COVID-19’s effect on procedure volume. Hospitals halt non-essential surgeries when COVID hospitalizations utilize most resources.
True enough, Intuitive faces a challenging time. However, it might have overdone some concerns (especially) when you consider a long-term standpoint when investing. Moreover, the Intuitive Q2 earnings report exhibits some excellent news. The firm’s CEO stated that the updates reveal much about Intuitive’s health.
Growth Despite COVID Disruption
The good news comes from the surge in procedure demand. Intuitive recorded an increase despite the increase in coronavirus hospitalizations in some geographies. Procedures surged 14% during the quarter Y/Y and 22% in nations outside the US, despite China’s COVID-driven lockdowns.
The best thing is the da Vinci robot system saw increased usage in surgical specializations. The US recorded growth in several general surgery types (including hernia repair and bariatric procedure) in the quarter. Urology witnessed solid strength out of the US. Also, other categories like gynecology and most general surgery are gaining momentum.
Intuitive management has ensured professionalism in explaining everything weighing on its earnings. The firm admits COVID has dented procedure volumes. And it believes that might continue. Also, Intuitive presented reasons behind the systems placements drop. Supply chain problems have hindered its capability to build and deliver the robots. Moreover, hospital budget pressure means the company executes orders quicker than in the past.
Moreover, the company showed faith in its future following stock buyback during the quarter. It rebought $500M in common stock. Beware that Intuitive boasts a steady track record in profit and revenue growth.
What Next for Intuitive
Well, the firm might take time to recover. However, investors should remember two things. First and foremost, today’s struggles are temporary and external. Though they might plague the company’s path for a while, they will not last forever. Secondly, Intuitive procedure upticks regardless of challenges show the growth might kick-start after the overall atmosphere improves.