Shares of Intuitive Surgical (NASDAQ:ISRG) have taken a hit with the rest of the market recently, falling 18% since Oct. 1. But shares are still up 28% over the past 12 months, reflecting the company's strong underlying performance recently. Can the company keep up its momentum and possibly even reinvigorate the stock's bullish run when Intuitive Surgical reports earnings next month?
The company, which makes the minimally invasive surgical robot named da Vinci, reports its fourth-quarter results on Jan. 24. Ahead of the fourth-quarter update, here's a preview of some of the key areas investors will want to watch.
One important metric for Intuitive Surgical Investors to watch every year is da Vinci procedures. Procedure trends are indicators of the company's customers' adoption and utilization of Intuitive Surgical's products and services.
This metric has been on a roll recently, with year-over-year growth rates in procedures accelerating. In the company's first, second, and third quarters of 2018, procedures increased 15%, 18%, and 20%, respectively. This momentum has been driven by growth in U.S.-based general surgery procedures and worldwide adoption of urologic procedures, management said in the company's third-quarter earnings release.
In Intuitive Surgical's third-quarter earnings call, the company increased its outlook for full-year 2018 procedure growth, suggesting management is optimistic about continued momentum in Q4. Management now expects procedures in 2018 to increase 17% to 18% year over year -- up from previous guidance for 14.5% to 16.5% growth.
da Vinci shipments
Intuitive Surgical's strong performance recently is particularly evident by the company's growth in da Vinci system shipments. Intuitive Surgical shipped 231 systems in Q3 -- up 37% from the systems shipped in the same quarter last year.
For Q4, management says it expects its year-over-year growth rate in system placements during the period to decelerate from the 30%-plus growth seen in recent quarters, implying expectations for a growth rate in the high twenties.
Another key metric to watch is Intuitive Surgical's growth in instrument revenue, or revenue from instruments and accessories that need to be replaced regularly. Driven primarily by growth in procedures, instrument revenue is unsurprisingly on the upswing, as well.
Instrument revenue rose 21% year over year in Q3, to $486 million. With strong procedure growth expected to persist in Q4, investors should look for similar growth in the metric in Q4.
Accounting for over half of Intuitive Surgical's total revenue, instruments is the company's most important segment. Systems and services -- the company's two other segments -- accounted for 30% and 17% of revenue, respectively.
Intuitive Surgical is scheduled to report fourth-quarter results after market close on Thursday, Jan. 24.