ISRG - Embedded Expectations Analysis - 2019 08 07
Intuitive Surgical, Inc. (ISRG:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 36.8x Uniform P/E. However, even at these levels, markets are pricing in muted expectations for the firm. Moreover, management may be concerned about margins, system conversions, and realizing manufacturing efficiencies.Specifically, management may be concerned about their ability to sustain da Vinci system growth, and they may lack confidence in the sustainability of recent gross profit margins. Moreover, they may be concerned about ongoing manufacturing variances which slow da Vinci installs, and they may be concerned about their ability to clear da Vinci SP for further clinical indications. Finally, management may be exaggerating the benefit their 3D robotic endoscope acquisition has on increasing manufacturing capacity, and they may be concerned about their ability to continue converting the installed base to Generation 4.
Intuitive Surgical develops, manufactures, and markets the da Vinci? Surgical System and the Ion? endoluminal system. The systems consist of a surgeon console or consoles, a patient-side cart, a vision system, and proprietary instruments and accessories. The company's technology is designed to provide surgeons with a range of motion analogous to the motions of a human wrist, while filtering out the tremors inherent in a surgeon's hands. The company's primary platform for robotic-assisted surgery is its family of da Vinci Surgical Systems. The da Vinci Surgical System allows surgeons to operate while seated at an ergonomic console viewing a three-dimensional image of the surgical field.
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