Barclays: Time To Buy Intuitive Surgical, It's Worth $575/Share

June 25, 2015

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In a report published Thursday, Barclays analyst Matthew Taylor initiated coverage of Intuitive Surgical, Inc. (NASDAQ: ISRG) with an Overweight rating and a price target of $575.

While Intuitive Surgical is the established leader in robotic surgery, analyst Matthew Taylor expects surgery share to “continue to shift to robotic from open and lap techniques, driven by technological enhancements, training, and data.”

So far this year, Intuitive Surgical has benefitted from a robust 13 percent growth in procedures in 1Q. It has raised its procedure guidance by 1 percent to +8-11 percent, which should support future system placements. Despite this, the company’s stock has declined by 6 percent year-to-date, versus an 8 percent rise in the Medical Devices index.

In the report Barclays noted that its our general surgery survey of 50 US surgeons indicates that “the Street may be too cautious on system placements in 2015-16 and demand for ISRG’s da Vinci among general surgeons is very high.” This positions the company for long-term growth and upside to consensus procedure numbers.

“Further, our urology survey shows that while doctors expect interventions to decrease overall (more watchful waiting), urologists expect robotic surgery to remain a stable part of their intervention mix and increase as a percentage of surgical interventions for prostate, which we think implies stability in US urology for ISRG,” the report added.

Taylor expects Intuitive Surgical’s core markets to remain stable and believes that the company’s “opportunities outweigh the risks.”