Wachovia Downgrades Intuitive Surgical (ISRG) to Market Perform
Wachovia downgrades Intuitive Surgical (NASDAQ: ISRG) from Outperform to Market Perform with a $290-$320 valuation range, citing valuation.
The firm believes that shares of Intuitive are now fully and appropriately valued and is concerned that the Company may issue 2008 guidance that is below the Street consensus (estimated revenues of 809.17 million and EPS of $4.69).
Considering the global credit crunch, which could certainly slow hospital capital spending, Wachovia noted that the markets estimates on Intuitive Surgical might be hard to attain as they assume a high level of system sales. According to the research report, "a recent survey by the Healthcare Financial Management Association (HFMA) identified increased costs of capital as an emerging limitation on hospital capital spending..." Thus, Wachovia feels that Intuitive Surgical could experience slowing growth of its da Vinci system in 2008 and possibly 2009.
Despite the talks of slowing growth, Wachovia raised its FY08 and FY09 earnings estimates on Intuitive Surgical. The firm now sees FY08 revenues up from a previous estimate of $768 million to $791 million and EPS up from $4.58 to $4.74. For the FY09, Wachovia expects Intuitive to report revenues of $1.01 billion and EPS of $6.33. The firm noted that these changes were the result of more bullish expectations for procedure growth, but Wachovia's systems placement estimates remain significantly below the Street consensus.
Intuitive Surgical, Inc., together with its subsidiaries, engages in the design, manufacture, and marketing of da Vinci surgical systems for use in urologic, cardiothoracic, gynecologic, and general surgeries.
The firm believes that shares of Intuitive are now fully and appropriately valued and is concerned that the Company may issue 2008 guidance that is below the Street consensus (estimated revenues of 809.17 million and EPS of $4.69).
Considering the global credit crunch, which could certainly slow hospital capital spending, Wachovia noted that the markets estimates on Intuitive Surgical might be hard to attain as they assume a high level of system sales. According to the research report, "a recent survey by the Healthcare Financial Management Association (HFMA) identified increased costs of capital as an emerging limitation on hospital capital spending..." Thus, Wachovia feels that Intuitive Surgical could experience slowing growth of its da Vinci system in 2008 and possibly 2009.
Despite the talks of slowing growth, Wachovia raised its FY08 and FY09 earnings estimates on Intuitive Surgical. The firm now sees FY08 revenues up from a previous estimate of $768 million to $791 million and EPS up from $4.58 to $4.74. For the FY09, Wachovia expects Intuitive to report revenues of $1.01 billion and EPS of $6.33. The firm noted that these changes were the result of more bullish expectations for procedure growth, but Wachovia's systems placement estimates remain significantly below the Street consensus.
Intuitive Surgical, Inc., together with its subsidiaries, engages in the design, manufacture, and marketing of da Vinci surgical systems for use in urologic, cardiothoracic, gynecologic, and general surgeries.
