Will MAKO Surgical Ever Fully Recover?

Next Tuesday, MAKO Surgical (UNKNOWN: MAKO.DL  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.

Until recently, MAKO Surgical's success with its RIO robotic surgery system for orthopedic procedures seemed almost assured, as the company was on the cutting edge of a promising new industry. Lately, though, troubling questions have arisen that could hurt MAKO's prospects going forward. Let's take an early look at what's been happening with MAKO Surgical over the past quarter and what we're likely to see in its report.

Stats on MAKO Surgical

Analyst EPS Estimate

($0.19)

Year-Ago EPS

($0.28)

Revenue Estimate

$24.82 million

Change From Year-Ago Revenue

26%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Will MAKO Surgical's earnings ever fully recover?
In recent months, analysts have gotten slightly less optimistic about MAKO's earnings prospects, widening their loss estimates by $0.03 per share for the first quarter and double that for the full 2013 year. But the stock has languished under more dramatic losses, with the stock falling nearly 15% since late January.

A combination of factors has hit MAKO hard this year. The implementation of Obamacare's medical device excise tax will force the unprofitable company to pay 2.3% of its gross sales. Moreover, weaker-than-expected sales of its RIO systems in 2012 led the company to miss earnings projections, and the guidance it gave in February for 2013 sales was uninspiring.

MAKO also had to deal with legal issues during the quarter. It filed suit against competitor Blue Belt Technologies over alleged violations of a non-competition agreement with a former sales manager who went to work for Blue Belt. Meanwhile, after filing suit against Stanmore Implants earlier in the quarter, MAKO settled last month, agreeing to buy Stanmore's robotic assets and removing a potential competitive threat.

Arguably, though, the worst news for MAKO came from competitor Intuitive Surgical (NASDAQ: ISRG  ) , which faces controversy over its da Vinci surgical system. The FDA recently announced it would investigate Intuitive's device in light of lawsuits filed by patients alleging injuries and deaths as well as comments from medical experts that the devices add expense without corresponding medical benefits. Although the two companies don't overlap as much as you might think in terms of medical procedures, MAKO is likely to suffer from any fallout from Intuitive's problems.

In MAKO's earnings report, watch for more detail on how the company plans to make use of its new Stanmore assets to bolster its business. Intuitive Surgical's problems could be an opportunity for MAKO to stand out from its better-known peer and demonstrate a competitive advantage.

The big question facing investors right now comes down to this: sitting near all-time lows, has MAKO Surgical's robotic surgery growth story rusted over? To answer this question, Fool.com analyst and MAKO expert David Meier has authored a premium research report covering all of the must-know details on the company, including key areas to watch and risks looming in the future for the medical robotics company. Claim your copy by clicking here now.


Click here to add MAKO Surgical to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (5) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On May 03, 2013, at 11:40 AM, captainccs wrote:

    >>>Will MAKO Surgical's earnings ever fully recover?<<<

    "Ever" is a very long time. Are you referring to this year, this decade, this century, this millennium or the next?

  • Report this Comment On May 03, 2013, at 11:58 AM, Dawgpac wrote:

    Let's see, that "uninspired" 2013 guidance still grows the installed base by 30%, two upgrades in the last three weeks, BlueBelt settled the lawsuit on MAKO's terms, Stanmore faced an ITC import ban for patent infringement and handed over their robot and related patents to MAKO for under $1M, Intuitive Surgical's problems may stem from a lack of standardized training and a lack of haptics (one of MAKO's strong points is the use of haptics), etc. At these depressed price levels, I'm more than happy to take my chances as they move to profitability in 2014.

  • Report this Comment On May 03, 2013, at 2:37 PM, chris293 wrote:

    For the government to place any tax on any company that is not profitable is close to insane. With companies that are doing anything (except charities) in the way of business, there are fees and taxes being paid by employees to costs of fees for many things involving manufacturing and transportation. This hurts our starting industries to survive. This could be the plan of some extreme

    groups.

  • Report this Comment On May 04, 2013, at 10:44 AM, drivebytrucker wrote:

    MF's big small cap pick from last year. Now they are panning them. Internet investing articles are so counterintuitive. What a joke!

  • Report this Comment On May 06, 2013, at 11:54 AM, havefunsaving wrote:

    I really wish folks would quit talking about MAKO and ISRG as competitors. They are not, in any way, except for competing for hospital spending dollars. In that sense, MAKO competes with GE and their CT scanners, etc.

    There is no overlap in their procedures. They operate in completely different ways on different parts of the body. It's not just that they don't overlap as much as one might think... they simply don't overlap, period.

    Other than that, I thought the article had merit.

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