Intuitive Surgical drops despite earnings beat as analysts highlight COVID-19 impact
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With a decline of ~5.2%, Intuitive Surgical (NASDAQ:ISRG) shares have extended losses in the pre-market even after recording better-than-expectedQ4 2021 financials on Thursday as Wall Street reacts to the pandemicâs impact on its business and managementâs comments on the guidance for 2022.

At the earnings call, the management forecasted a procedure growth of 11-15% for FY22. âThe low end of this range assumes ongoing COVID pressure and hospital staffing shortages, while the high end assumes no significant new surges after the current wave,â Brian King, Senior Director of Treasury and IR, remarked. Indicating the higher supply chain costs and investments, the company pointed to a non-GAAP gross profit margin of 69.5-70.5%, compared to 71.2% in 2021.

Piper Sandler analyst Adam C. Maeder, with a Neutral rating on the stock, notes that the FY22 guidance stands below the consensus despite the âsolidâ Q4 revenue beat. Amid a challenging environment due to the Omicron-fueled resurgence of COVID-19, the quarterly revenue and procedure growth indicate a âsolidâ performance, the analyst argues.
âHowever, we suspect ISRG is baking in some conservatism in this outlook consistent with its past practices,â wrote Maeder.
Meanwhile, Wells Fargo analyst Larry Biegelsen with an Overweight rating on the stock has slashed the price target on Intuitive Surgical (ISRG) to $350 from $381 per share to imply a premium of ~20% to the last close. With guidance affected by COVID-19 and investments, Biegelsen predicts 2022 to be an investment year.
Evercore ISIâs Vijay Kumar, with an In-line rating on Intuitive Surgical (ISRG), notes the management comments warning that January had worsened vs. late December levels, which, according to the analyst, is not surprising, but lessens the prospects for a procedure beat in the current quarter.
In December, Goldman Sachs commented on the pandemicâs impact on the recovery in hospital procedure volumes and the rebound in MedTech procedures. However, the firm added Intuitive Surgical (ISRG) to its conviction list, citing a major catalyst for the company this quarter.