Why Intuitive Surgical Stock Is Soaring Today

What happened

Shares of Intuitive Surgical (ISRG -0.55%) were soaring 12.6% higher as of 10:59 a.m. ET on Wednesday. The big gain came after the robotic surgical systems leader announced its first-quarter results following the market close on Tuesday.

Intuitive Surgical reported Q1 revenue of $1.7 billion, up 14% year over year. The consensus estimate was for revenue of $1.6 billion.

The company posted Q1 earnings of $355 million, or $1 per diluted share, based on generally accepted accounting principles (GAAP). This result was down from GAAP earnings of $366 million, or $1 per diluted share, in the prior-year period.

Intuitive generated non-GAAP earnings in the first quarter of $437 million, or $1.23 per diluted share. This reflected solid improvement from non-GAAP earnings of $413 million, or $1.13 per diluted share, in the first quarter of 2022. It also topped the average analysts' earnings estimate of $1.20 per share.

So what

Perhaps the most encouraging aspect of Intuitive Surgical's Q1 update is that the company delivered strong growth despite continuing to face two headwinds. First, COVID-19 caused procedure volumes in China to be lower in January. Second, the sustained strength of the U.S. dollar resulted in lower revenue growth. Intuitive said that Q1 sales increased 17% year over year on a constant-currency basis compared to the 14% increase reported.

This solid performance was driven primarily by strong procedure volume growth. Intuitive reported that da Vinci procedures soared around 26% year over year. CEO Gary Guthart noted the "positive surgical trends" and added that there is "continued interest in robotic-assisted surgery when compared with other surgical approaches."

Now what

While da Vinci is Intuitive's main growth engine, the company's Ion endoluminal robotic system could contribute more in the near future. Intuitive won European certification for Ion in March. It plans to focus first on the U.K. market while additional clinical data is collected to support reimbursement in other European countries.