For Intuitive Surgical's New Robot, The World Just Got a Whole Lot Bigger

A new market just opened up for Intuitive Surgical's da Vinci Xi. Here's what investors need to know.

Jun 25, 2014 at 5:41PM

Intuitive Surgical stock

The da Vinci Xi surgical system can now be marketed in Europe, Credit: Intuitive Surgical

Intuitive Surgical Inc. (NASDAQ:ISRG) may have unveiled its da Vinci Xi robot in early April, but until now the promising robotic surgery system has only seen the world through a narrow lens.

To be sure, for the past three months, Intuitive Surgical has "only" been allowed to market the da Vinci Xi to prospective customers in the United States. On Wednesday, however, Intuitive Surgical announced it has received a CE Mark for the new system, which effectively means the product complies with all essential requirements of European health, safety, and environmental legislation.

Long story short: Intuitive Surgical is now free to market the da Vinci Xi both in Europe and any other countries that require CE Marking. 

Why aren't shares rallying?
Curiously, though, shares of Intuitive Surgical were little changed on the news. So what gives?

For perspective, investors initially celebrated the da Vinci Xi's arrival by pushing Intuitive Surgical stock up more than 19% in just a few days. And noting the da Vinci Xi offered some big technical improvements over its predecessor, I wholeheartedly agreed with the optimism. All in all, it's apparent the da Vinci Xi holds promise to even further extend Intuitive Surgical's commanding lead in robotically-assisted soft-tissue surgery.

However, the market's elation quickly faded the following week, when shares plunged after Intuitive Surgical issued disappointing preliminary first-quarter results.

To explain its weakness, Intuitive cited both disappointing U.S. system sales -- which still comprised 45 of Intuitive Surgical's total 87 total systems shipped during the quarter, by the way -- and a $26 million revenue deferral related to a customer trade-out program for the da Vinci Xi. Specifically, Intuitive Surgical gave certain customers who recently purchased an older da Vinci Si system the option of swapping both that system and its related instruments for the newer da Vinci Xi.

Even if Intuitive still gets to eventually recognize that revenue, the deferral made its already weak results look all that much worse. What's more, now that Intuitive Surgical has a CE Mark in place for the da Vinci Xi in Europe, it's reasonable to assume the company will be offering a similar trade-out program to customers in that region. Combine that with continued weak U.S. capital spending, and it's no surprise Intuitive Surgical shares remain under pressure.

Foolish takeaway
At the same time, though, you'll be hard pressed to find Intuitive Surgical shareholders complaining about this necessary milestone for expanding the da Vinci Xi's reach into other countries. And to its credit, early last month Intuitive attempted to appease investors by increasing their slice of the pie through a $1 billion accelerated share repurchase agreement. Intuitive Surgical CEO Dr. Gary Guthart elaborated the decision "reflects our long-term view of the value our company can bring to patients, surgeons, and hospitals."

In the end, no matter how much short-term pain the company endures, I think investors should be happy to see Intuitive Surgical isn't simply resting on its laurels. Over the long-term, I'm still convinced patient investors will be glad they stuck with this industry leader.

A huge innovation opportunity
The best investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool’s new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Intuitive Surgical. The Motley Fool 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information