| Stock (Symbol) | Stock Price | |
Intuitive Surgical (ISRG) |
$344 |
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| Data is as of | Expected to Report | Sector |
February 14, 2011 |
Apr 19 |
Healthcare |
| Sharek’s Take | ||
 Intuitive Surgical just turned the momentum from down to up. The stock had been on a downward trend due to the possibility of slowing profit growth (from the mid-30s to the mid-teens). Then last quarter ISRG crushed earnings estimates and came through with 55% profit growth (I had expected 15%). The stock popped and has since been consistently hitting new 6-month highs.
ISRG is not the stock it used to be — less hyper growth, more certainty. 2004-2006 the stock used to run wild as the million dollar Da Vinci robotic doctor made its way into hospitals. Now the company gets half its revenue from selling replacement parts for existing Da Vincis, sells new-and-improved robots to existing clients, and brings in new customers at a slower pace. Hysterectomy procedures are providing growth opportunity for the da Vinci. But since this story is mainly replacement parts, I’m not going to dive into sexy figures like hoe many da Vincis were sold last quarter, or how big the hysterectomy market is. |
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| One-Year Chart | ||
 The slow-death 2010 is clearly visible on the one-year chart — and the recent pop after last quarter’s earnings shot the stock back over $300. Since ISRG has continued higher, this stock is timely.
Estimates show 18% and 16% growth ahead, but recall estimates were for 15% last quarter and the company blew the cover off the ball with 55% profit growth. The estimated Long Term Growth Rate of 25% is solid. |
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| Earnings Table | ||
 Profits were up 55% last quarter, after being in the 30s the prior two quarters. Sales rose an uninspiring 21%. Yawn.ISRG crushed estimates, beating the street by a whopping 78 cents. This company used to whip estimates when it was a hyper-growth stock. The big thing is Annual Profit Estimates didn’t jump — this isn’t the same company it was during 2004-2006. Quarterly estimates jumped — but still show teens growth the next two quarters. I would prefer 30% growth — and I think this company can do it, I just like to see it in advance. I would have liked to have seen better quarterly growth. |
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| Fair Value | ||
 ISRG’s Fair Value P/E goes from 30 to 35. At the current stock price, upside isn’t that great. Yawn. 2012 Fair Value is good, so if you like to buy and hold and aren’t looking to swing for the fences, then this might be a good stock for you. |
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| Ten-Year Chart | ||
 This stock has a wild ten-year chart. The 2008 market crash caused strain on hospital budgets, and ISRG’s profit growth slowed from 44% in 2008 to 16% in 2009. Then the stock came roaring back but it was so quick that a lot of the old shareholders had already sold (me) and had to buy back at a higher price.
This stock is volatile, and resistance stands at $350 to $400. I might try to sell ISRG high. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
20 of 21 |
Overall I’m not excited about this stock — other than its been going up. The ten-year chart is scary, quarterly estimates don’t look great and annual estimates didn’t increase much. ISRG is ranked 20th in the 21 stock Growth Portfolio Power Rankings. I’m not telling you to sell this stock — and more good news might come next quarter that changes my thinking — I’m just not excited about less hyper-growth/more certainty. ISRG is not a good candidate for the Aggressive Growth Portfolio. | |
Aggressive Growth Portfolio
N/A |
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