Analysts Constructive On Intuitive Surgical Following Solid Quarter

Intuitive Surgical, Inc. (NASDAQ: ISRG) shares are sharply higher Friday following strong quarterly results.

The Analysts

Morgan Stanley analyst David Lewis reiterated an Overweight rating and $620 price target for Intuitive Surgical. (See his track record here)

Wells Fargo analyst Larry Biegelsen reiterated an Outperform rating and $620 price target. (See his track record here)

Morgan Stanley: We Remain Very Constructive On Intuitive

Intuitive Surgical's results were better than expected, thanks to an acceleration in procedures, Lewis said in a note. The strong showing has come despite competitive fears.

Systems average selling price improved sequentially to the highest mark on the year, the analyst noted.

Despite the third-quarter seasonality, placements in Europe recovered. Lewis said with these, all of first-half concerns are virtually resolved.

The analyst expects fourth-quarter procedure growth of 17.5%, which he feels could prove conservative, as it represented a 100 basis-points of momentum deceleration.

Morgan Stanley said it remains very constructive on Intuitive Surgical, as "Phase 1 is still driving significant growth, the company is just scratching the surface on Phase 2, and it is building the foundation for Phase 3."

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Wells Fargo: ‘Solid Quarter Driven by Strong Q3 Results'

The robust third-quarter results were orchestrated by a number of factors, including higher procedure volume growth, systems shipped and ASPs, as well as higher gross margins and a lower effective tax rate, Biegelsen said.

The company raised its procedure volume growth guidance as well gross margin guidance. Wells Fargo raised its 2019 and 2020 estimates.

"Overall, it was a solid quarter and driven by strong Q3 results," the analyst said.

Price Action

Intuitive Surgical shares were rallying 5.3% to $557.51 at time of publication.