Expansion Of Procedures Will Likely Drive Growth For Intuitive Surgical’s da Vinci Systems Sales

Intuitive Surgical’s (NASDAQ:ISRG) da Vinci Single Port platform was recently approved for urological surgical procedures by the U.S. FDA. This is welcome news for Intuitive Surgical, and the stock reacted positively with over a 4% jump in Friday’s trading session. The company’s da Vinci surgical systems have been doing well of late, with total shipments jumping a solid 44% in Q1 2018. We expect steady growth in the segment revenues, primarily led by higher shipments in the near term. It should be noted that the company also stated that it will start shipping the da Vinci systems in the U.S. only by Q3 2018. We have created an interactive dashboard of Intuitive Surgical’s products segment. You can adjust the revenue drivers to see the impact on overall revenues and the company’s share price estimate.

Expect Double Digit Growth For da Vinci Systems Sales

We expect Intuitive Surgical’s da Vinci Systems revenues to grow at a CAGR of a little over 10% over the next 2-3 years. This growth will be led by higher shipments of da Vinci systems. An increase in the number of procedures performed will drive the demand. The company’s surgical systems have been widely adopted for select procedures. However, more procedures are being adopted at a growing rate, and we expect this trend to continue in the future. A wider range of possible procedures will likely result in greater demand for the company’s systems. The recent FDA approval for da Vinci Single Port platform is for a urological surgical procedure. The company stated that it will likely seek regulatory clearances for transoral, transanal, and extraperitoneal applications, thereby widening the scope of its Single Port platform. 

Higher demand for da Vinci systems will also bode well for its accessories sales. We expect the instruments and accessories sales to grow in the high teens in 2018. While the installed base grew 13% (y-o-y) in Q1 to 4,528 units, we expect this to be much higher at 4,806 by the end of 2018. With average Instrument & Accessories spend per installed unit at $0.40 million, this will result in segment revenues of over $1.90 billion, according to our estimates. 

We currently forecast an adjusted EPS of $9.74 for Intuitive Surgical in 2018. Our price estimate of $441 is around 8% below the current market price.

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