Tonight, we'll get the fourth-quarter earnings report from robotic-surgery specialist Intuitive Surgical
What Fools say:
Here's how Intuitive Surgical's CAPS scoring rates against some of its peers and competitors.
Market Cap (Millions) |
Trailing P/E Ratio |
CAPS Rating (out of 5) |
|
---|---|---|---|
Hitachi |
$24,290 |
81.2 |
** |
Toshiba |
$21,680 |
17.1 |
*** |
Boston
Scientific |
$17,830 |
73.2 |
** |
Intuitive Surgical |
$9,334 |
78.4 |
**** |
Integrated Surgical Systems |
$2 |
1.1 |
- |
If you couldn't tell from that table, let me tell you that it's hard to find a bona fide competitor for this company. Boston Scientific is on the list because it's a major supplier of traditional surgery supplies, and the rest are only planning to develop robotic-surgery tools. You might as well throw in Johnson & Johnson
Our bullish CAPS players like the company for its first-mover advantage in a unique and very promising field, and they like to list the surgical procedures that a da Vinci robot can perform better than any set of hand-held scalpels and tongs can.
Most of the bears are just worried about the stock's valuation, but they still love the company. A lone exception in the crowd notes the lack of tactile feedback to the surgeon and says that the surgical benefits don't come close to outweighing the steep cost of the robots.
What management does:
Sales continue to grow even in lean times, when hospitals don't really feel like spending money on expensive upgrades. Why is that happening? Because the installed robot base still needs expensive disposable supplies to function, and the more practice the doctors get, the more disposables they use up. It's like the famous Gillette model -- you give away the handles and make a fortune selling the disposable blades.
6/2006 |
9/2006 |
12/2006 |
3/2007 |
6/2007 |
9/2007 |
|
---|---|---|---|---|---|---|
Gross |
67.7% |
66.7% |
66.5% |
66.6% |
66.5% |
67.6% |
Operating |
30.5% |
28.7% |
28.8% |
29.4% |
30.7% |
32.2% |
Net |
34.1% |
29.5% |
19.3% |
19.9% |
20.6% |
22.7% |
FCF/Revenue |
16.0% |
18.5% |
22.5% |
24.8% |
26.9% |
25.7% |
Growth (YOY) |
6/2006 |
9/2006 |
12/2006 |
3/2007 |
6/2007 |
9/2007 |
---|---|---|---|---|---|---|
Revenue |
69.8% |
65.7% |
63.9% |
55.8% |
55.7% |
57.7% |
One Fool says:
Intuitive's share price has dropped more than 27% so far in this young year, including 13% in the past week alone. In a strange turn of events, analysts actually expect the company to beat the Street estimates that they are responsible for generating, but then they think that revenue guidance for the coming year will be meek. And the stock looks expensive by any traditional measure, even after the recent fall: If you bought some shares a year ago, you're still sitting on a 139% gain today.
The valuation worry is a fair point, but I think the stock is trading at an appropriate price right now -- neither terribly expensive nor at a mouthwatering discount. It can still drop further, unless Intuitive manages to impress the analyst gang across the board with strong results and an optimistic update. Much like Apple
And then we step in and load up on cheap shares. After all, these guys still don't have any real competition, and we're not getting any younger -- or healthier.