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Underperform pick
| Company | Mako Surgical (Nasdaq: MAKO) |
|---|---|
| Submitted By: | TSIF |
| Member Rating: | 99.92 |
| Submitted On: | 5/23/2011 |
| Stock Price at Underperform Recommendation: | $31.57 |
| Star Rating | **** |
|---|---|
| Headquarters | Fort Lauderdale, Fla. |
| Industry | Health Care Equipment |
| Market Cap | $1.27 Billion |
| Industry Peers | Opko Health (AMEX: OPK) Hansen Medical (Nasdaq: HNSN) Medtronic (NYSE: MDT) |
Sources: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and Motley Fool CAPS.
Mako Surgical has had an excellent run the last six months and is a 3 bagger for faithful holding longs. Overall they are gaining analyst and institutional support. Some of the rise is the comparison to Intuitive Surgical [(Nasdaq: ISRG)] which is up 32X since 2003. I'm not sure if the comparison is close and I do understand the value of finding an entry position in a promising equity, but I expect a correction to occur soon.
Mako Surgical continues to lose money and while I agree that when Mako Surgical does book a profit that it will be a nice catalyst for the stock, at this point however the P/B of 11.3, P/S of 26 and the negative cash flow do not support the 3X rise. A 26% short position could cause another spike upward should Mako Surgical issue any "surprises," but overall I believe this run is done. It's hard to argue at times with momentum stocks as the top is very difficult to call, but I think the risk/reward is back down on this one. (Estimating sub $22).
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