Intuitive Surgical Faces Continued Earnings Uncertainty Amid Prolonged COVID-19 Pandemic

[Asia Economy Reporter Minji Lee] Intuitive Surgical, a manufacturer of surgical robots, is expected to face continued earnings uncertainty this year due to the impact of the novel coronavirus infection (COVID-19). This outlook is based on the expectation that hospital budgets remain focused on COVID-19, limiting significant growth in product sales.

According to the financial investment industry on the 24th, Intuitive Surgical reported fourth-quarter sales of $1.33 billion last year, a 4% increase compared to the same period the previous year. Operating profit was recorded at $416 million, up 4.6%. By segment, accessory sales reached $747 million, rising 11.3%. Da Vinci system sales were $367 million, down 11.9% from last year but exceeding market expectations ($314 million). Service sales increased 13.2% to $215 million during the same period.

Global quarterly shipments totaled 326 units, a 3% decrease compared to the same period last year. U.S. shipments were 196 units, remaining at the same level as the previous year, while overseas shipments were 130 units, down 7% from a year ago but with a reduced rate of decline compared to previous quarters. The second quarter saw a 10% decrease, and the third quarter a 12% decrease.

Although key indicators have improved compared to the severely impacted second and third quarters due to COVID-19, concerns about earnings uncertainty remain high this year. This is because hospital budgets are expected to be reduced amid signs of COVID-19 resurgence in some regions. There is also significant uncertainty due to delays in diagnostic tests such as colonoscopy and PSA tests, and the possibility of regulatory approval applications for competing surgical robots in the first quarter.

However, the surgical robot ecosystem is expected to strengthen further. Lee Young-jin, a researcher at Samsung Securities, said, “The company plans to respond through measures such as lowering component prices, increasing usage frequency, and expanding operational leases,” adding, “As emphasized at the JP Morgan Conference, the acceleration of technology integration through digital transformation is expected, not only in hardware aspects like imaging but also in the use of big data and machine learning.”

In fact, the company plans to enhance customer-tailored data analysis services (education, economic analysis, surgical method suggestions, VR solutions, etc.) this year based on data generated from 6,000 surgical robots worldwide. Kim Choong-hyun, a researcher at Mirae Asset Daewoo, said, “Customer-tailored data analysis services will directly present to clients the total cost reduction from shortened hospital stays, which is the greatest benefit of surgical robots,” adding, “Although earnings uncertainty will continue this year, it will be an opportunity to strengthen the surgical robot ecosystem.”

Meanwhile, the current stock price is at 61 times the 12-month forward price-to-earnings ratio, which is higher than the average over the past five years. While the growth potential of the surgical robot market is positive, a cautious approach to buying is expected to be necessary. Researcher Kim advised, “For new investors, we recommend a long-term approach rather than an aggressive buying strategy.”

This content was produced with the assistance of AI translation services.