Intuitive surgical (ISRG) disappointed on Wednesday with a slight pre-announcement for the fourth quarter, sending ISRG stock down. In the meantime, InMode (INMD) beat expectations, but INMD stock also plummeted.
The news from Intuitive Surgical was complicated by expectations that the company would announce another system launch, said Evercore ISI analyst Vijay Kumar. Intuitive Surgical is known for its da Vinci Robotic Surgery System. The company recently announced $2 billion in accelerated repurchase agreements, fueling speculation.
“Expectations were high for the launch of a new system,” Kumar said in a report. “We suspect that today’s results are not sufficient given the current market environment. The other key question for investors will be whether Intuitive Surgical can demonstrate operational leverage in fiscal year 2023 and when we can launch a potential new system.”
Both share drops came despite a fractional jump for the broader Medical-Systems/Equipment industry group. During today’s morning stock market trades, ISRG shares fell 4.1% close to 260.20, while INMD shares slid 4.9% close to 34.90.
ISRG Stock: Strong Procedural Growth
For the fourth quarter, Intuitive Surgical pre-announced revenue of $1.66 billion, up 7% from the comparable quarter in 2021. But that was just short of analyst forecasts of $1.69 billion, according to FactSet.
Evercore’s Kumar blamed the light da Vinci sales on a lower-than-expected sale price of $1.43 million. Recently, the systems cost $1.5 million, he said. Total system placements topped ISRG equity analysts’ opinions, while placements in the US were low.
The number of procedures using the Intuitive Surgical robot grew 18% year over year, exceeding forecasts.
Intuitive Surgical also led to 12%-16% procedure growth in 2023.
“The conservative guide is typical of Intuitive Surgical to start the year,” Kumar said. “Given the recent trends of teens (percentage) of growth, we suspect investors will be looking for an ultimate guide to growing into teens (percentage).”
Kumar maintained his in-line rating and price target of 250 on ISRG shares.
InMode beats INMD stock analyst calls
InMode, on the other hand, beat expectations in its Q4 pre-announcement. But INMD shares fell anyway.
The medical aesthetics company expects revenue of $133.2 million to $133.4 million and adjusted earnings of 73-74 cents per share. Analysts polled by FactSet expected $129.7 million in sales and 65 cents in earnings per share.
InMode also issued its first outlook for 2023. The company expects revenue of $525 million to $530 million, up 16%-17%. That just topped INMD equity analysts’ call for $524 million.
“Given InMode’s consistent revenue numbers since the company’s IPO, we view InMode’s outlook for 2023 as conservative and see opportunities for new products to generate additional upside in 2023,” said Kumar.
He has a buy rating and a price target of 60 on InMode stock.
Both ISRG stocks and INMD stocks dipped below their 50-day moving averages following preliminary Q4 reports, according to MarketSmith.com.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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