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ISRG Stock Sinks After Strong Earnings: Is the Growth Priced In?

Intuitive Surgical stock price Timing is everything. Intuitive Surgical, Inc. (NASDAQ: ISRG) delighted investors by beating revenue and earnings expectations when it reported second-quarter earnings after the market closed on July 20. However, the stock dropped nearly 5% after the report.  

Revenue came in at $1.76 billion, which was approximately 1% above expectations of $1.74 billion. On the bottom line, however, the company posted $1.42 in earnings per share, a 6.7% increase over the $1.33 EPS that was expected. The company also reported strong year-over-year growth in procedures and in placements for its da Vinci robotic surgical system.  

So Why is ISRG Stock Falling?  

Diving into the report, the strongest growth in procedures came in the areas of cholecystectomy, hernia repair, and bariatric surgery. However, in the latter category, the company did report that growth was slower on a year-over-year basis as some patients are opting to take drugs over surgery.  

That nugget of information by itself doesn’t justify a nearly 5% decline in the stock. After all, Intuitive Surgical still forecasts its 2023 procedure growth rate will be in a range of 20% to 22%, up from 18% to 21%.  

But at a time when ISRG stock is up 55% in the last 12 months, some investors may have been looking for a reason to take a little profit.  

However, it’s also likely that ISRG stock is experiencing volatility as part of the unscheduled rebalance of components of the Nasdaq 100 to which Intuitive Surgical belongs. As Kate Stalter reported for MarketBeat earlier this week, ISRG stock is one of the stocks expected to have NASDAQ: ISRG">greater weight in the index. That means ETFs that hold ISRG must buy enough shares to correlate with the heavier weighting.  

Is Intuitive Surgical an AI Play?

As a company that specializes in robotic surgery, it was natural for the company to get a question of how Intuitive Surgical is applying artificial intelligence (AI) in its operations. And the answer is that the company has been involved in AI for over a decade.  

On the call, Intuitive Surgical touted its suite of digital tools, which the company says can be expanded upon with machine learning, including its Computer Vision technology. The company sees itself in the early stages of a process that includes getting secure access to data, collaborating with customers to aggregate meaningful data, and then analyzing the data to look for correlation.  

Analysts Remain Bullish on ISRG Stock 

According to the Intuitive Surgical analyst ratings on MarketBeat, three analysts boosted their price targets for ISRG stock after the earnings report. And that’s in addition to Truist Financial, that boosted its price target for the stock on July 19. Notably, all of the new price targets are above the consensus price target for the stock.  

In early trading the morning after the company’s earnings report, the analysts may be right. ISRG stock appears to have found support and is starting to climb higher. That would set investors up for new highs later this year.  

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