Is Intuitive Surgical in Trouble?

Intuitive Surgical (NASDAQ: ISRG  ) shares took a nose dive Thursday, falling 11% in the closing minutes of trading in reaction to a Bloomberg article that exposed an FDA inquiry into a rise in adverse event reports related to the use of Intuitive's daVinci robotic surgery system.

On the surface, the reaction to headlines of an FDA inquiry seemed merited. After all, essentially 100% of Intuitive Surgical's revenue is derived from sales of the daVinci robot, instruments used for conducting surgery with the robot, and maintenance contracts. However, after absorbing the facts, fears of immediate FDA action appear to be misguided.

According to Bloomberg, in January the agency sent a survey to doctors focused on two main topics: the training received for performing procedures on the daVinci, and what procedures they felt were most appropriate.

The timing of the inquiry is also quite interesting. In late December the first of a series of negative research reports by Citron Research noted that inadequate training was one factor leading to some of the adverse patient outcomes. While its unlikely that the FDA would admit it, I'm inclined to think that these widely circulated reports were, at a minimum, taken into consideration before conducting the survey.

Adverse events are an inevitability in surgery, robot or no robot. After all, despite years of education and training, surgeons are still human, and as we all know that means they're fallible. While a rise in reported adverse events was cited as the FDA's motivation, the agency appeared hesitant to use language suggesting that the increase was disproportionate to the growth in procedures being performed. That's a good thing for Intuitive.

Shares of the company are rebounding this morning in response to yesterday's late day overreaction. As of 8:30 a.m EST, the stock had returned to around $555, down only 3% from its levels prior to the sharp drop. That level of decline seems more merited given the new uncertainties around this inquiry. I wouldn't expect much upside potential for shares in the near-term until more details emerge.

Are stories of this demise greatly exaggerated?
Recently, some investors have questioned Intuitive Surgical's future. However, Intuitive Surgical expert Karl Thiel believes a visible path to long-term growth persists. Will Intuitive capitalize, or be crushed by unforeseen pitfalls? His report highlights all of the key opportunities and risks facing the company -- and includes a full year of ongoing updates as key new hits -- so be sure to claim your copy by clicking here now.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2436891, ~/Articles/ArticleHandler.aspx, 12/19/2014 3:27:43 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement