Earnings Play on Intuitive Surgical (ISRG)

04/12/2010 10:57 am EST

Focus: STOCKS

Elizabeth Harrow

Financial Analyst, Schaeffer's Investment Research, Inc.

Medical device maker Intuitive Surgical (ISRG) is slated to unveil its first quarter results next Thursday, April 15. Analysts surveyed by Thomson Reuters are expecting a profit of $1.68 per share, up from 72 cents per share in the year-ago period. ISRG has bested analysts' earnings expectations in each of its previous three reports.


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However, option players are loading up on puts ahead of ISRG's earnings release. The stock's ten-day International Securities Exchange (ISE)/Chicago Board Options Exchange (CBOE) put/call volume ratio of 0.89 ranks in the 79th annual percentile, pointing to elevated skepticism.

Plus, 6.2% of the equity's float is sold short. Given the stock's solid earnings history, along with its long-term uptrend along the support of its ten- and 20-week moving averages, ISRG could benefit from an unwinding of bearish bets if it manages to exceed expectations again.

By Elizabeth Harrow, contributor, Schaeffer’s Trading Floor Blog

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