Intuitive Surgical (Nasdaq: ISRG) tends to inspire people. If it's not the promise of short hospital stays and fewer aches and pains after a small-incision robotic surgery, it's last quarter's results making fellow Fool Brian Orelli shout "Intuitive for president!"
But the stock has crashed hard in the past year. Is that the beginning of a long, hard winter, or an invitation to invest and frolic in green fields? Let's find out.
What Fools say
Here's how Intuitive Surgical's CAPS rating stacks up against some of its peers and competitors:
| |
Market Cap (billions)
|
Trailing P/E Ratio
|
CAPS Rating
|
|
Intuitive Surgical
|
$3.91
|
19.7
|
****
|
|
Integra LifeSciences Holdings (Nasdaq: IART)
|
$0.79
|
50.4
|
****
|
|
CONMED (Nasdaq: CNMD)
|
$0.50
|
10.9
|
*
|
|
Accuray Incorporated (Nasdaq: ARAY)
|
$0.30
|
N/A
|
*****
|
|
Hansen Medical (Nasdaq: HNSN)
|
$0.13
|
N/A
|
****
|
Data taken from Motley Fool CAPS and Yahoo! Finance.
Please note that I'm using the phrase "peers and competitors" in a very broad manner here -- these companies work in minimally invasive surgery, but not necessarily with robotics. For more info, come back after the next table.
CAPS All-Star SwordAgain is overflowing with enthusiasm for this stock in this recent pitch:
Analysts finally downgrading and lowering estimates, leading to an impression that they are giving up on high growth targets. This leaves room for upgrades and raising expectations. Channel checks indicate that hospitals still have credit for buying robotic systems. Projections are slightly reduced. Lowest P/E in a long while gives a great opportunity to buy.
Fellow All-Star StckPickr3000 is less optimistic: "Medical Equipment sector is just getting hammered right now. I think this sector will only truly recover when the entire market gets its legs back under itself."
What management does
This is about as close to the definition of a strong business as I've ever seen. I'll let you bask in the glory of Intuitive's numbers on your own. Meet you back here in a minute.
|
Margins
|
6/2007
|
9/2007
|
12/2007
|
3/2008
|
6/2008
|
9/2008
|
|
Gross
|
66.5%
|
67.6%
|
69.0%
|
69.3%
|
70.3%
|
70.9%
|
|
Operating
|
30.4%
|
32.2%
|
34.7%
|
35.5%
|
36.1%
|
36.4%
|
|
Net
|
20.6%
|
22.7%
|
24.1%
|
24.5%
|
24.7%
|
24.3%
|
|
FCF/Revenue
|
26.9%
|
25.7%
|
30.9%
|
27.7%
|
22.7%
|
21.4%
|
|
Growth (YOY)
|
6/2007
|
9/2007
|
12/2007
|
3/2008
|
6/2008
|
9/2008
|
|
Revenue
|
55.7%
|
57.7%
|
61.2%
|
64.7%
|
62.8%
|
59.0%
|
|
Earnings
|
(5.9%)
|
21.5%
|
100.6%
|
103.4%
|
95.1%
|
70.3%
|
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says
Intuitive Surgical's moat isn't just wide. It's filled with triflic acid and mutant carnivorous plesiosaurs, surrounded by electrified razor wire, and patrolled 24/7 by veterans of the French Foreign Legion. In other words, this business fears no competitor and has no peers. Intuitive has bought its fiercest rivals, and its money-making technology is guarded by layers of patent protection. If you're getting robotic surgery done, it's very likely performed with these da Vinci robots.
Now, Intuitive already released preliminary results, pointing to about 22% year-over-year sales growth overall but 45% higher sales of the disposable accessories you need to replace after each surgery; $82 million of the company's $232 million revenue came from these renewable sales in a Gillette-like "give away the handles and make a killing on the blades" business model. If it's good enough for Procter & Gamble (NYSE: PG), it's certainly good enough for a smallish-cap medical technology expert.
Sure, the economic crisis is forcing some hospitals to push back expensive upgrades like a million-dollar robotic surgeon. But the Greatest Generation is not getting any younger, and they will start asking for low-impact surgery that only Intuitive can deliver. Moreover, the vast majority of all da Vincis still move into American hospitals, leaving a massive global market nearly untapped.
Check out that diminutive P/E ratio above, and compare it to the surging growth rates. You're getting a massive deal here, Fool. Let the market panic while you consider buying Intuitive Surgical on the cheap.
Of course, when Intuitive Surgical officially releases earnings later this week, Brian Orelli will be back here with detailed coverage. Stay tuned.
Further robotic Foolery:
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