Early Tuesday, Johnson & Johnson (JNJ) posted better-than-expected Q3 earnings, including double-digit sales growth in advanced surgery that Evercore analyst Vijay Kumar says could prove a boon for Intuitive Surgical (ISRG).
The two stocks, however, had diverged by the closing bell on the stock market today. Johnson & Johnson finished the day down 2.6% to 115.41. Intuitive Surgical stock closed up 1.7% to 721.73, for a gain of 12.29 a share. Intuitive Surgical is set to report its Q3 earnings after the close Tuesday, as shares try to gain traction after breaking out a flat base at 720.10 on Sept. 27.
IBD'S TAKE: Johnson & Johnson is facing an upcoming rivalry in its pharmaceutical unit, where Celgene, Gilead Sciences, Galapagos and Biogen are all also working on drugs to treat Crohn's disease.
For Q3, Johnson & Johnson reported $17.82 billion in sales and $1.68 earnings per share minus items, up a respective 4% and 13% vs. last year. Both metrics topped the consensus of 24 analysts polled by Thomson Reuters for $17.74 billion and $1.66.
But sales fell 1.6% in its huge consumer segment. On the other hand, pharmaceutical and medical devices sales grew 9.2% and 1.1%, respectively. J&J pulled in $884 million in its still-small advanced surgery device unit, up 11.2%.
"In general, this seems to be bode well for Intuitive Surgical ...," Kumar wrote in his research report. Intuitive Surgical is known for its Da Vinci robots surgery system.
For A3, analysts expect Intuitive Surgical to report $5.14 EPS ex items on $650.5 million in sales. EPS would dip by 2% while sales would climb 10%.
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