| Stock (Symbol) | Stock Price | |
Intuitive Surgical (ISRG) |
$275 |
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| Data is as of | Expected to Report | Sector |
November 4, 2010 |
Jan 24 |
Healthcare |
| Sharek’s Take | ||
 Intuitive Surgical’s stock was above $350 during the Spring. Then the stock trended down with the NASDAQ during the Summer. When September hit the NASDAQ — and tech stocks in particular — took off and ISRG continued to act…shall we say..a little sick. The trouble with ISRG right now is the company didn’t knock the cover off the ball last quarter, but it did two quarters ago. So expectations were a little high. Also, ISRG had a 38 P/E when I reviewed the company last quarter as well as two quarters ago. With an expected Long Term Growth Rate of 25%, a 38 P/E was generous. Now with a 27 P/E, the stock isn’t as high as it used to be. |
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| One-Year Chart | ||
 ISRG’s one-year chart tells a big story. Profit growth was 50-60% earlier in the year, then fell to the 30-40% range the past two quarters. Teens growth is expected during the next six months but I think ISRG will beat the street. With a P/E of 27, I don’t see the stock continuing to slide. |
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| Earnings Table | ||
 Profits were up a solid 38% last quarter as sales rose 23%. Nice numbers.ISRG did beat the street — which last quarter I thought it needed to do. That’s good because quarterly estimates show teens-growth ahead and I’d like to see that get beat. Annual estimates fell a bit on the slightly disappointing earnings. Profits are now expected to grow 19% next year. Estimates for the next two quarters declined a little. With fair profit growth estimated for the next nine months, ISRG needs to keep beating the street. |
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| Fair Value | ||
 Last quarter I thought ISRG could get a 45 P/E. Now that seems too high. With maybe 20-25% growth coming, 30 times earnings is about right. ISRG has a lot of recurring revenue each quarter because it sells replacement parts for daVinci’s, so profits are fairly certain. |
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| Ten-Year Chart | ||
 Its easy to get down on ISRG this year, but in defense of the stock — it has gone on a ten-fold move higher. The correction down to $100 in 2008-2009 would normally make me concerned but that was during the bear market. The economy is doing well now. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
16 of 18 |
I think investors took ISRG too high earlier in the year, and now the stock’s back to where it should be. Although this company is no spring chicken when it comes to growth opportunity aheaad, Intuitive is still selling new daVincis and Japan will be the next area to expand into. ISRG is ranked 16 in the 18 stock Growth Portfolio Power Rankings. With the stock selling for close to fair value there might not be a whole lot of upside potential. Also, estimates declined slightly and that will make it tough for ISRG to become very timely. I still like this stock and think the correction is pretty much done. ISRG is not a good candidate for the Aggressive Growth Portfolio. |
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Aggressive Growth Portfolio
N/A |
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