Tag Archives: isrg

Varian Spinoff Could Boost Sluggish Topline Growth, Says Analyst

Varian Medical Systems ( VAR ) got a mostly favorable reception from Wall Street Tuesday after it announced late Monday that it’s spinning off its imaging-components business into a separate company. Varian said that it will complete the spinoff by year’s end through a tax-free distribution that will turn the imaging unit into a stand-alone company. The business is “fundamentally different” from Varian’s core business in radiation oncology, Varian CEO Dow Wilson said in a statement, so the two will be better off apart. Varian said that it will incur $35 million in charges but financial guidance for this year is otherwise unchanged. Varian’s management said the spinoff will bring $20 million in “dis-synergies” for the remaining company, mostly through increased general and administrative expenses, but that after a couple of years this should be offset by a combination of cost-cutting and service agreements between the two companies. RBC Capital Markets analyst Brandon Henry gave a thumb’s up and raised his price target on Varian stock to 88 from 85, while affirming a sector-perform rating. “Varian’s Imaging Components business has weighed on the company’s topline growth for the last five quarters,” Henry wrote in a research note, citing slowing customer demand along with competitive and pricing pressures. “However, we expect Imaging Components to return to low-single-digit year-over-year growth in fiscal year 2017.” Varian’s revenue growth has been stuck in single digits for the last four years, and in the most recent quarter was flat. Henry sees the spinoff as an opportunity for the remaining company to broaden its reach in the cancer market. “We do not expect any transformational M&A, as management likes to keep a relatively conservative balance sheet,” he wrote. “However, we expect slightly more topline growth going forward to be from tuck-in M&A than in the past.” Varian stock was up a fraction in early trading on the stock market today , near 83. The stock holds a decent IBD Composite Rating of 76, helped partly by being in the highest-ranked of all the medical groups, Systems & Equipment, which currently stands at No. 19 in IBD’s ranking of 197 industry groups. Top stocks in the group include Intuitive Surgical ( ISRG ), Masimo ( MASI ) and Cantel Medical ( CMN ).

Intuitive Surgical Q1 Impresses Wall Street, As Stock Hits New High

Surgical-robot maker Intuitive Surgical ( ISRG ) received multiple price target hikes from Wall Street, as its stock hit a new high Wednesday, following its Q1 earnings report late Tuesday. As IBD reported, Intuitive Surgical’s Q1 earnings beat estimates , but what really interested analysts was the quarter’s 17% procedure growth. Intuitive Surgical normally sells only about 100 of its pricey da Vinci robotic systems per quarter, so surgical procedures using the company’s consumable accessories and services are key to steady revenue. Management raised procedure-growth guidance for the year to 12% to 14%, from the previous 9% to 12%. Operating expenses increased, and Intuitive Surgical’s management also raised its opex guidance for the year to 12% to 15% of revenue, up from 9% to 13% previously. However, it likewise raised its gross-margin guidance to 69% to 70%, from 68% to 69.5%. Intuitive Surgical is on IBD’s Big Cap 20. Who else makes the grade? “Intuitive Surgical’s impressive Q1 procedure growth is consistent with our recent positive general surgeon checks,” wrote RBC Capital Markets analyst Brandon Henry as he raised his price target to 640 from 610 while maintaining a sector perform rating. “While Intuitive Surgical is accelerating operating expense spend, we believe these investments should drive increased future robotics adoption and help the company maintain its superior position in the robotics market, despite upcoming competition.” The company has no competitors at present, but Medtronic ( MDT ), TransEnterix ( TRXC ) and Johnson & Johnson ( JNJ ) partnering with Alphabet ‘s ( GOOGL ) Verily division are all developing their own robotic surgery systems. Leerink analyst Richard Newitter lifted his Intuitive Surgical price target to 710 from 700 while maintaining an outperform rating. “A now stronger outlook for Urology/GYN and general surgery gave management confidence to raise ’16 procedure guidance,” Newitter wrote in his research note. “Also, management seems to be talking more aggressively about da Vinci use in thoracic, a procedure area we think may be around the corner as an emerging growth driver.” Piper Jaffray analyst Matt O’Brien raised his price target to 610 from 550. He rates the stock neutral. Intuitive Surgical stock hit a record high of 654.88 early on the stock market today , pushing it up 20% for the year. In morning trading, shares were up 4.5% near 652.

Intuitive Surgical Beats Q1 Estimates As Stock Hovers Near High

Robotic-surgery specialist Intuitive Surgical ( ISRG ) beat Wall Street’s Q1 earnings estimates late Tuesday, but the stock was down 1% in after-hours trading. Intuitive Surgical’s earnings totaled $4.42 a share, up 24% from the year-earlier quarter and topping analysts’ consensus of $4.33 a share, according to Thomson Reuters. Sales gained 12% to $595 million, vs. analysts’ $593 million. Intuitive Surgical is one of the highest-rated stocks in the Medical Systems group, which is collectively doing well at No. 24 on IBD’s ranking of 197 industry groups. Shares hit a lifetime high of 630.67 last Wednesday, and have hovered within 1% of that mark since then. The stock closed down a fraction in regular trade on the stock market today , at 623.71. Intuitive Surgical is the second of three hot medical stocks reporting earnings this week. Earlier Tuesday, Johnson & Johnson ( JNJ ) hit a new high of 113.95 after it beat Q1 estimates and raised its full-year guidance due to diminishing foreign-exchange headwinds. Stryker ( SYK ), which also hit a new high of 110.98 early Tuesday but gave back its gains later, is due to report earnings Wednesday after the close.