(Reuters) – Intuitive Surgical Inc (ISRG.O) said on Thursday it would continue to spend heavily on research and development in 2018, seeking to fend off competition and maintain its dominance in the surgical robotic systems market.
Company executives also forecast profit margins for 2018 below 2017 levels on a call with analysts after Intuitive reported better-than-expected earnings for the fourth quarter.
Sunnyvale, California-based Intuitive’s shares, which hit a record high earlier in the day, fell 3 percent in after-hours trading.
Excluding a $318 million tax expense, Intuitive reported earnings of $2.54 per share. The result exceeded analysts’ average estimate by 30 cents, according to Thomson Reuters I/B/E/S.
But investors, who sent the company’s stock up 73 percent last year and 23 percent in 2018, may have been expecting a bigger earnings outperformance, said Brandon Henry, an analyst at RBC Capital Markets.
“They don’t have big deals on the horizon, and they should be investing internally,” said RBC’s Henry.
The higher spending comes amid strong demand for Intuitive’s surgical robots.
Intuitive shipped 216 da Vinci systems in the quarter, compared with 163 in the prior-year period.
The number of surgical procedures using its products rose about 17 percent in the fourth quarter. The company expects the number of procedures to rise 11-15 percent in 2018.
Reflecting the tax expense, Intuitive reported a net loss of $38.8 million in the quarter, compared with a profit of $204 million a year earlier.
Total revenue rose 17.9 percent to $892.4 million.
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