Why 2 Key Stocks Dropped After Hours Thursday

The stock market finally took a bit of a break on Thursday, although it didn't keep the Dow Jones Industrial Average (^DJI 0.40%) from posting yet another day of gains. Despite significant declines for the Nasdaq Composite (^IXIC 2.02%) and the S&P 500 (^GSPC 1.02%), it's hard for investors to complain too much after the big run higher that market indexes have enjoyed this month.

Data source: Yahoo! Finance.

Earnings season continued to churn out more financial reports, and CSX (CSX -0.12%) and Intuitive Surgical (ISRG 0.59%) were two of the most closely watched companies that were releasing their latest results. Both stocks declined after hours, and it has been interesting to see how investors are reacting to reports that generally include both encouraging positive aspects and some concerns for what the future might bring.

CSX hits the brakes

Shares of CSX fell about 5% in after-hours trading on Thursday. The railroad stock giant reported second-quarter financial results that reflected some of the slowdown in global trade activity as financial conditions remained tight in many areas of the world.

CSX's numbers were generally weaker than they were last year. Revenue fell 3% year over year to $3.70 billion, with a combination of falling prices for exported coal, decreases in intermodal volumes, and lower fuel prices weighed on the railroad's top line. Net income fell a steeper 15% from the same period last year, and earnings of $0.49 per share were down 9% from the second quarter of 2022, despite a sizable decline in outstanding share count.

Looking more closely at its business, CSX had pockets of strength and weakness. Shipping volumes for automotives were sharply higher, leading the way for CSX with 21% growth. Positive impacts from mineral shipments, along with metals and equipment, also contributed to the railroad's performance. Yet on the downside, weakness in forest products, chemicals, and agriculture and food products combined with intermodal declines to weigh on overall results.

For the full year, CSX believes that high inflation could persist, and it's taking steps to boost efficiency in order to counteract the negative impact of strong pressure on goods prices. That's not what investors anywhere want to hear, and it explains in part why CSX shares are moving lower.

Intuitive Surgical needs some help

Meanwhile, shares of Intuitive Surgical were also down almost 5% after hours. The pioneer in robotic surgical equipment reported second-quarter financials that failed to meet all the expectations investors had for it.

By most measures, Intuitive Surgical seemed strong. Revenue climbed 15% year over year to $1.76 billion, with higher volumes of surgical procedures helping to lift instruments and accessories revenue by 20% from year-ago levels.

Intuitive sold 331 da Vinci surgical systems during the period, up from 279 in the year-earlier period. Adjusted net income jumped 22% to $507 million, working out to $1.42 per share.

However, some investors wanted to see more sizable growth in the size of Intuitive's installed base of da Vinci users. The company has 8,042 systems in the field, up by about 900 over the past 12 months. Yet with many patients returning to have elective procedures done after delaying them during the early years of the COVID-19 pandemic, some shareholders had wanted to see sharper gains.

Intuitive Surgical has been growing steadily for years, and it plans to foster further expansion for years yet to come. With so much attention on AI and robotics, Intuitive Surgical is in a great position to capitalize on AI healthcare applications as innovation keeps moving forward.