Several top-rated medical technology companies reported better-than-expected earnings late Thursday, but shares generally fell on various concerns ranging from European weakness to rising costs.
Intuitive Surgical (ISRG), maker of the da Vinci robotic surgery system, beat analysts' quarterly estimates for the 13th quarter in a row. Sales climbed to $537 million, up 26% from a year earlier and $15 million over analysts' consensus. Profit rose 29% to $3.75 a share, beating views by 19 cents.
Nonetheless, shares dropped 5.5% in late trading, after sliding 0.9% during the regular session.
Europe Less Surgical
Investors may have been reacting to management's repeated comments on the conference call about head winds in Europe, which drove international revenue down sequentially though it was up year over year.
Earlier Thursday, JMP Securities analyst Jose Haresco told IBD that recent forecast cuts from Mako Surgical (MAKO) and Hologic (HOLX) have gotten the Street questioning the willingness of hospitals to spend on expensive capital equipment.
Nonetheless, management lifted the 2012 revenue growth outlook to 20% to 23%, 2 percentage points above the prior range. Analysts had expected 21.5% growth to $2.14 billion. Intuitive didn't give EPS guidance but said operating income will remain about 39% to 40% of revenue.
The biggest upside surprise came from Cubist Pharmaceuticals (CBST), which handily beat estimates. On a GAAP basis, the bottom line reversed a year-ago loss to hit 58 cents a share, 13 cents above analysts' average. Non-GAAP earnings rose 28% to 68 cents a share. Sales jumped 30% to $230 million, about $4 million over estimates.
The drugmaker is a year into its five-year plan, which among other things aims to break its dependence on anti-infective Cubicin. Cubicin still provided 87% of sales, but Cubist's buyout of Adolor in December added revenue from bowel drug Entereg.
Cubist's stock rose about 2% after the close. Shares closed down 1.3% in the regular session.
Athenahealth (ATHN), a provider of cloud-based clinical IT services such as billing and record-keeping, edged profit estimates with a 9% rise to 24 cents a share excluding one-time items. Revenue rose 33% to $103.5 million, just below analysts' average $103.7 million.
The company forecast more of the same, predicting full-year revenue growth of 31%-33% and EPS up 2%-13%. The lagging bottom reflects a heavy investment in marketing and research.
"Given the nascent stages of (Athena's) business and the low current customer base, we view these investments as prudent to supporting the vision of 30% top-line growth," ISI Group analyst Ross Muken wrote in his July 11 initiation report. Analysts expect profit growth to rise above 30% in each of the next two years, resuming its historic rate.
Athenahealth's shares dipped a fraction after the close.
Align Technology (ALGN), maker of the Invisalign teeth-straightening system, said earnings rose 70% to 34 cents per share, beating views by 6 cents. Sales rose nearly 22% to $145.6 million, above estimates of $143 million.
Invisalign case shipments rose 25.3% year over year to 95,300. But the dental scanning business didn't fare as well. CEO Thomas Prescott in a statement blamed continued "challenging" Europe demand.
Align sees Q3 EPS of 27-29 cents on revenue of $136.8 million-$140.8 million amid various promotions.
Align shares fell 3.5% in late trading after closing up 2.7%.
