Why MAKO Surgical Shares Got Whacked

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of medical device company MAKO Surgical (Nasdaq: MAKO  ) sank a staggering 35% on Tuesday after its quarterly results and outlook disappointed Wall Street.

So what: MAKO's stock has risen nicely in 2012, but lower-than-expected first-quarter sales -- $19.6 million versus the consensus of $23.7 million -- coupled with a full-year guidance cut is forcing Mr. Market to sober up quickly. While management's outlook isn't drastically lower, investors are nervous that slowing hip utilization trends set the company up for even more misses down the road.   

Now what: Management now expects to sell 52 to 58 RIO systems in 2012, down from its previous sales view of 56 to 62 RIO systems. "On the positive side, we were encouraged by the continued interest shown in our hip application and the quality and quantity of clinical data that continues to be generated that supports the clinical and economic benefit of MAKOplasty," President and CEO Maurice Ferre, M.D., reassured investors. So while MAKO is certainly suffering through some growing pains, long-term investors should view today's huge pullback as a potentially profitable entry point.

Interested in more info on MAKO? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of MAKO Surgical. Motley Fool newsletter services have recommended buying shares of MAKO Surgical. Try any of our Foolish newsletter services free for 30 days.

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Read/Post Comments (5) | Recommend This Article (7)

Comments from our Foolish Readers

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  • Report this Comment On May 08, 2012, at 2:16 PM, jpluce wrote:

    Gosh, didn't the Fool just publish an article stating MAKO is going to be a breakout or the next ten bagger? Ha! another great job.

  • Report this Comment On May 08, 2012, at 3:21 PM, GW1000 wrote:

    There is a better chance of MAKO becomming a ten bagger now. Long term investors hope for pullbacks like this in order to buy more stock.

  • Report this Comment On May 08, 2012, at 3:42 PM, stevenwells wrote:

    buying now...that is my play and i am sticking to it

  • Report this Comment On May 08, 2012, at 6:32 PM, TMFSymington wrote:

    I used this pullback to double down. As Warren Buffett wrote a few months ago:

    "The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day's supply."

  • Report this Comment On May 08, 2012, at 9:45 PM, CrankyTexan wrote:

    jpluce, try looking at the chart for ISRG. It has incredible drops on its way to legendary returns.

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