Why Intuitive Surgical Sank Again

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 robotic surgery system specialist Intuitive Surgical (NASDAQ: ISRG  ) plunged yet again on Friday after it issued guidance that disappointed Wall Street, and said that the FDA had issued a warning letter over one of its facilities.

So what: The stock already plunged last week after management issued a second-quarter sales warning, so today's downbeat full-year guidance, coupled with the FDA's letter to resolve some of its concerns, only reinforce the worry that analysts have been having. While safety concerns have weighed on the stock for several months now, fellow Fool Dan Carroll noted earlier that the seemingly drastic slump in da Vinci sales suggests that all of those issues are finally hitting Intuitive where it hurts most -- on the bottom line.    

Now what: Management now expects full-year sales growth between zero and 7% over 2012, well below Wall Street's view of a 15% increase. "Though some da Vinci procedures mature in the United States, we are increasingly exposed to volatility in patient admissions for our core procedures and the consequent lumpiness in capital sales," said CEO Gary Guthart in a conference call with analysts. Of course, with the stock now off a whopping 40% from its 52-week highs, and trading at a 10-year low P/E, much of the uncertainty surrounding Intuitive might already be discounted into the price.

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  • Report this Comment On July 19, 2013, at 5:37 PM, Ranger056 wrote:

    Sorry Brian.. I have heard your type of line many times before "with the stock now off a whopping 40% from its 52-week highs, and trading at a 10-year low P/E, much of the uncertainty surrounding Intuitive might already be discounted into the price". ISRG faces serious difficulties and another sharp down leg cycle has only just started. Lot more to fall as this story plays out. Why am I wrong Brian?

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