Why Intuitive Surgical, Inc. Might Pull Back

Does this analyst make a good case or is it just more noise from Wall Street?

Mar 4, 2014 at 11:36AM

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Intuitive Surgical (NASDAQ:ISRG) slipped about 2% this morning after Cantor downgraded the robotic surgery technologist from buy to hold.

So what: Along with the downgrade, analyst Jeremy Feffer reiterated his price target of $450, pretty much in line with the stock's current levels. Although Feffer continues to be bullish on Intuitive's long-term growth drivers, he thinks that Wall Street is underestimating the risks surrounding its near-term growth trajectory.

Now what: According to Cantor, Intuitive's risk/reward trade-off is fairly balanced at this point. "While we remain positive on the long-term story, we have near-term concerns about the stock's current valuation relative to what we expect will be at least two more difficult quarters," Feffer said. "We applaud the company's efforts to use this 'down' year to reinvest in the business -- both in new products and expanding its O-U.S. sales infrastructure -- but in our view, too many uncertainties remain with respect to hospital spending and procedure volumes to justify a significantly higher multiple at this point." Of course, with Intuitive continuing to boast a cash-rich balance sheet, as well as stock that's now off about 15% from its 52-week highs, those short-term concerns might be providing patient Fools with a relatively safe long-term growth opportunity.

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Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Intuitive Surgical. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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