| Stock (Symbol) | Stock Price | |
Intuitive Surgical (ISRG) |
$356 |
|
| Data is as of | Expected to Report | Sector |
April 28, 2011 |
Jun 18 |
Healthcare |
| Sharek’s Take | ||
 Intuitive Surgical announced a solid quarter that beat many estiamtes. The company sold 120 Da Vinci Systems, seven more than analyst estimates. Proceedure growth was 30%, better than estimates of 26%. Hysterectomty proceedures will provide growth opportunity in the future. This company is becoming more dependable because of recurring revenue from parts that have to be used to keep existing da Vinci’s operating. Replacement parts (recurring revenue) made oup 57% of sales, up from 53% last quarter.The negative is ISRG is growing in the low 20s and the stock’s P/E is 32. So the question is what kind of P/E does ISRG deserve considering more than half its revenue is highly dependable? |
||
| One-Year Chart | ||
 ISRG is selling around where it did a year ago. It went too low in late 2010 and has rebounded this year. Quarterly profit growth just slowed. Estimates look good but that 32 P/E is higher than both Estimates and the estimated five-year Long Term Growth Rate. |
||
| Earnings Table | ||
 Profits were up 22% last quarter, down big-time from the 55% 2QtrsAgo. Sales rose 18% compared to 21% growth a quarter earlier.ISRG crushed estimates by 78 cents 2QtrsAgo and only beat by 8 cents last quarter. This stock will lose momentum. Annual Profit Estimates hardly moved. I’m unimpressed. Quarterly estimates show solid growth coming the next two quarters, then profit growth is set to slow. ISRG has done this before only to come out with solid growth in the future so its too early to say growth will slow. |
||
| Fair Value | ||
 Last quarter I took the Fair Value P/E from 30 to 35. Now I take it down to 25. Even last quarter the upside wasn’t that great. Now I see why ISRG lost momentum after it reported earnings April 19. This stock’s a little overvalued. |
||
| Ten-Year Chart | ||
 ISRG took a wicked fall in 2008-2009 when its growth slowed and the P/E contracted. I don’t think that will happen again as recurring revenue will provide a big cusion. Profits are expected to grow 18% this year, assuming ISRG beats then it could grow 25%. |
||
| Power Ranking | Bottom Line | |
Growth Portfolio
20 of 20 |
Intuitive Surgical has a nice recurring revenue stream. There’s high certainty here. On the other hand the P/E of 32 is higher than the estimated growth rate of 23% a year. TI think this stock is worth 25 times earnings.
ISRG is ranked 20th in the 20 stock Growth Portfolio Power Rankings. This stock is maturing into a dependable core stock. Right now I have my eyes on companies growing explosively. I might sell ISRG from this portfolio if I get enticed elsewhere. ISRG is not in the Aggressive Growth Portfolio. |
|
Aggressive Growth Portfolio
N/A |
||
