Intuitive Surgical Shares Plunge on Weak Sales Forecast

Joe Goldman |

Shares of Intuitive Surgical (ISRG) plunged during trading hours on Tuesday after the company issued a discouraging second quarter earnings forecast.

Intuitive Surgical, which produces the da Vinci surgical robot for minimally invasive surgeries, expects second quarter net income of $160 million, versus the $178 million analysts were expecting. Even more disappointing was expected revenue, which is expected to come in at $575 million, versus the $630 million analysts were expecting, a growth rate of only seven percent year-over-year.

The big miss was caused by weak demand for the company's robotic systems, as sales from its flagship da Vinci surgical system are expected to fall six percent to $215 million. However, questions surround the driving factors behind the disappointing sales slump.

The company attributed the weak forecast to a decline in hospital admissions and a lack of insurer willingness to pay for expensive, robot-conducted surgeries. It also cited a weak economy and moderating growth in gynecologic procedures.

“While we are disappointed in our performance this quarter, particularly with respect to our capital sales in the U.S., overall procedure performance was solid in a difficult environment,” said CEO Gary Guthary in a press release.

However, some analysts and investors see things entirely different. It’s possible that the Intuitive Surgical's multi-million dollar devices provide less value to healthcare providers now than ever before; medicine and surgical techniques are perpetually improving, and doctors may now be able to execute successful, minimally invasive surgeries without the use of Intuitive Surgical's expensive robots.

Amid heavy selling pressure and a barrage of downgrades, Intuitive Surgical shares plunged 17.94 percent to $410.35 during trading hours on Tuesday.

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Companies

Symbol Name Price Change % Volume
ISRG Intuitive Surgical Inc. 724.83 4.84 0.67 325,662

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