Is Intuitive Surgical Finally Slowing Down?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

It's bound to happen to every high-growth company eventually. Sustaining growth is increasingly difficult as the base a company is working from continues to increase. At some point, saturation kicks in.

For Intuitive Surgical (Nasdaq: ISRG  ) , that time may be coming.

The most important metric for the robotic surgery company has always been the number of procedures performed on its machines. The procedures directly drive sales of instruments used during the surgical procedures.

Unlike a typical medical-device maker like Medtronic (NYSE: MDT  ) , Boston Scientific (NYSE: BSX  ) , or St. Jude Medical (NYSE: STJ  ) that make money off the procedure and it's done, Intuitive Surgical also derives revenue from its $1.4 million da Vinci Surgical Systems that perform the surgery.

Procedures indirectly drive sales of new machines because there's only so much time one instrument can be used. As the time on the machine gets filled up, surgeons start demanding a new machine from hospital management; 19 of the 88 new machines installed in the first quarter went to returning customers. And many of the new hospitals are likely buying one because they see their patients heading to their cross-town rival that are increasing their procedure count.


Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Year-over-year procedure growth






Source: Company releases.

Procedure growth slipped in the first quarter. An anomaly you ask? Not according to management, which kept 2011 guidance in procedure growth at 25% to 28%. Since the first quarter was higher than that, the last three quarters have to average lower.

Let's keep this in perspective, though. If Intuitive Surgical hits its target, 25% to 28% is still pretty solid growth. And the company is in the process of developing new instruments that could increase the average revenue per procedure and/or allow da Vinci to be used in new types of procedures.

The low hanging fruit may be gone, but I wouldn't write off Intuitive Surgical just yet.

Interested in up and coming technology? Click here to get the Fool's free report, The Only Stock You Need To Profit From the NEW Technology Revolution.

Intuitive Surgical is a Motley Fool Rule Breakers recommendation. The Fool owns shares of Medtronic. 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.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 21, 2011, at 12:54 AM, rmiers wrote:

    I don't like this particular author, not only because I don' agree with him but he does not have a historical perspective on the company. He is in fact spewing the same negativity we have heard for years.

    He conveniently leaves out ISRG's 130m bankable cash (it has averaged 50ml for years)

    He also leaves out the acceptance value of both procedure and instrument (worth fortunes)

    He somewhat sidesteps the ROW (rest of world) and like most Americans forget there are others out there with lots of industry and cash.

    He zero mentions a lifetime of conservative guidance from management.

    Worse of all, he doesn't mention the 30% growth in a traditional bad quarter.

    I am surprised this fella flies under a motley fool flag...they are usually more grounded.

    I guess I would be crazy to bring up the NASA heritage and it's intended use.

    2% retraction of guidance means the whole darned company is

    Thats Kodak, Zerox, and Studebaker thinking.

    Just a Ultra bull ISRG fool who has a better vision and memory. Time will prove truth

  • Report this Comment On April 21, 2011, at 7:00 PM, TMFBiologyFool wrote:

    "Worse of all, he doesn't mention the 30% growth in a traditional bad quarter."

    But it's compared to a traditional bad quarter. That's what year over year means.

    And I never said the company was through. Did you read the last two paragraphs?


Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1478878, ~/Articles/ArticleHandler.aspx, 10/22/2016 8:17:35 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 11 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
ISRG $678.02 Down -3.80 -0.56%
Intuitive Surgical CAPS Rating: ****
BSX $22.82 Down -0.19 -0.83%
Boston Scientific CAPS Rating: ***
MDT $83.91 Down -0.11 -0.13%
Medtronic CAPS Rating: *****
STJ $79.36 Down -0.27 -0.34%
St. Jude Medical CAPS Rating: **