By Sam Boughedda
Intuitive Surgical (NASDAQ:ISRG) shares jumped over 6% on Tuesday after the company revealed it has entered into an accelerated share repurchase (ASR) agreement and on hints that it has confirmed a new robotic platform launching soon.
Goldman Sachs analysts reiterated a Conviction Buy rating and $237 per share price target on Intuitive Surgical after today's new $1 billion accelerated buyback and clues from its 10-Q that essentially confirm a new robotic platform launching in the coming weeks/months.
The analysts said in a research note that "along with the company's change in tone on last week's earnings call, which to us had already implied an increased confidence towards a new system launch, now comes explicit language in the 10-Q which suggests increased R&D spending on a new robotic platform in the quarter."
The analysts explained that in its description of R&D expenses each quarter, Intuitive always lists 5-6 key investment areas within its product development initiatives and that this quarter, future gen of robotics was listed first.
Regarding ISRG's ASR, the company will make an initial payment of $1 billion and receive an initial 3.6 million shares of common stock.
Following the news, RBC Capital Markets analysts stated that they believe ISRG has $1.5 billion authorization remaining under its share repurchase program.
"ISRG's Board authorized an aggregate of $10B of funding for the company's common stock repurchase program since its establishment in March 2009. The most recent authorization occurred in July 2022, when the Board increased the authorized amount available under the program to $3.5 billion, including amounts remaining under previous authorization. As of September 31, 2022, the remaining amount of share repurchases authorized by the Board was $2.5 billion or $1.5B including today's announcement," wrote the analysts, who has an Outperform rating and $285 price target on the stock.
"We believe ISRG remains committed to returning cash to shareholders along with supporting its stock price at current levels (stock down ~35% YTD) as it remains confident in the long-term outlook for the company," they continued.
Elsewhere, Evercore ISI analysts said that with ISRG announcing a 2nd ASR within 2 months of announcing the first, investors are likely to see this as a positive. "This ASR coming after its 3Q call, where investors thought the company's tone shifted relative to the CapEx environment is timely and further supports the thesis that perhaps ISRG is feeling good about capital sales going forward," wrote the analysts.