Intuitive Surgical (ISRG) continues to use it position as a manufacturer of leading edge medical devices to steadily and rapidly increase revenues and profits. Intuitive Surgical went public in 2000 as a company which had lost $5 million the previous year on $3 million in revenues. Investors who took the leap of faith in the company's technology and held on for the ride have seen a 4,000 percent profit on their initial investment.
Intuitive Surgical manufactures robots which allow surgical procedures to be less invasive by conveying the surgeon's movements via robot, performed through small incisions. The company markets several surgical robot devices under the da Vinci brand name.
For the second quarter of 2011, the company reported continued growth coupled with a very positive earnings surprise. Revenues increased 21 percent to $426 million, up from $351 million a year earlier. The Wall Street consensus estimate for revenues was $410 million. Net income jumped by 32 percent to $2.91 per share. In 2010 the second quarter EPS was $$2.19. The consensus for the quarter earnings per share was $2.71.
Included in the earnings report was the note than Intuitive Surgical had more than $1.8 billion in cash on the balance sheet. Cash increased by $65 million, and $140 million was used to buy back 400,000 shares.
With this latest earnings release, the consensus estimate for full year 2011 will be approximately $11.40 per share. At $400 per share, this level of earnings puts ISRG at a forward P/E multiple of 35. The $11.40 number would be a 20 percent increase over 2010 earnings. However, the company has exceeded the estimated earnings for five consecutive quarters.
Following the earnings release, analysts at JMP Securities increased the target price on ISRG to a range of $430 to $460. Goldman Sachs analysts upgraded the stock from sell to neutral with a target price of $370.
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