By Sam Boughedda
Intuitive Surgical (NASDAQ:) shares rose more than 6% on Tuesday after the company revealed it has entered into an accelerated share repurchase agreement (ASR) and on hints it confirmed a new robotic platform to be launched soon.
Goldman Sachs analysts reiterated a Conviction Buy rating and a $237 a share price target on Intuitive Surgical after today’s new accelerated $1 billion buyback and clues from the 10-Q that essentially confirm a new robotic platform in the coming weeks/months is launched.
The analysts said in a research note that “along with the company’s change of tone on last week’s earnings call, which already implied for us heightened confidence toward a new system launch, explicit language is now coming into the 10-Q that suggests more R&D spending on a new robotics platform in the quarter.”
The analysts explained that Intuitive always lists 5-6 key investment areas within its product development initiatives each quarter in its R&D spend description, and that the next-generation robotics was listed first this quarter.
As for ISRG’s ASR, the company will make an initial payment of $1 billion and receive an initial 3.6 million shares of common stock.
In response to the news, analysts at RBC Capital Markets said they believe ISRG still has $1.5 billion in authorization under its share repurchase program.
ISRG’s board of directors has approved a total of $10 billion in financing for the company’s common stock repurchase program since its inception in March 2009. Amounts remaining subject to prior approval. shares approved by the board of directors $2.5 billion or $1.5 billion including today’s announcement,” the analysts wrote, who have an Outperform rating and a $285 price target for the stock. .
“We believe ISRG remains committed to returning cash to shareholders and supporting the stock price at current levels (stock declined ~35% YTD) as confidence continues to remain in the long-term outlook for the company,” they continued.
Elsewhere, Evercore ISI analysts said that with the announcement of ISRG within 2 months of announcing the former, investors are likely to view it as positive. “This ASR that comes after the 3Q call, where investors believed the company’s tone had changed relative to the CapEx environment, is timely and further supports the notion that ISRG may have a good feeling about the capital sales in the future,” the analysts wrote.