Shares of Intuitive Surgical Inc. jumped Wednesday after the robotic surgical device maker reported strong growth in the third quarter and raised its expectations for 2011.
THE SPARK: Intuitive Surgical said its net income rose 41 percent in the third quarter, to $122.4 million, or $3.05 per share. Its revenue climbed 30 percent to $446.7 million. A year ago, Intuitive Surgical earned $86.6 million, or $2.14 per share, on $344.4 million in revenue.
Analysts had expected net income of $2.77 per share on $417.3 million in revenue, according to FactSet.
Intuitive said it sold 133 da Vinci surgical systems during the quarter, up from 105 a year ago. Revenue from instruments and accessories rose 38 percent to $175.8 million, and revenue from da Vinci system sales grew 25 percent to $199.1 million.
THE BIG PICTURE: The Sunnyvale, Calif., company now says its annual revenue will grow 22 to 23 percent from 2010, which implies a total of $1.72 billion to $1.74 billion. It had forecast growth of 19 to 21 percent. Intuitive Surgical also says procedures performed on the da Vinci system will grow 29 to 30 percent, compared to a previous estimate of 27 to 29 percent.
Analysts expect the company to report $1.7 billion in revenue in 2011, up 20 percent from a year ago.
THE ANALYSIS: William Blair & Co. analyst Ben Andrew said procedure growth was especially strong in international markets. He said the greatest growth overseas came from prostate procedures, while in the U.S., hysterectomy procedures improved. He said procedures should increase 20 to 25 percent through 2015.
"The company has continued to beat expectations for several quarters in a row, which we believe suggests that hospital administrators have turned the corner in beginning to understand the economic benefits and profitability of robotic surgery and should help sustain system sales for some time," Andrew wrote. He kept an "Outperform" rating on the stock.
SHARE ACTION: Intuitive Surgical stock picked up $38.28, or 10 percent, to $421.04 in morning trading. Earlier, the shares reached an all-time high of $421.77.