Shares of robotic surgery systems maker Intuitive Surgical Inc. rose more than 1 percent Monday, as a ThinkPanmure analyst said market fears about hospitals' access to credit to buy equipment have been overblown.
Sunnyvale, Calif.-based Intuitive Surgical makes da Vinci systems which allow surgeons to perform highly intricate procedures through small ports or incisions, using robot technology. This makes the surgery less invasive for patients, who experience less pain and quicker recovery.
Analyst Stephan Ogilvie upgraded shares of Intuitive Surgical to "Buy," and backed his $360 price target, saying a recent sell-off has created a buying opportunity for investors at historically cheap levels.
Over the last 12 months the stock has almost doubled, but since mid-April shares have lost about a quarter of their value due to a disappointing 2008 outlook.
He also said that checks with a number of third-party hospital finance specialists lead him to believe there hasn't been a slowdown in access to credit to buy hospital equipment, despite weak financial markets. And although General Electric Co.'s earnings miss last quarter on disappointing health care capital equipment sales generated concern about such hospital investments, Ogilvie doesn't think GE's story was a market-wide phenomenon.
In a note to clients, Ogilvie said his channel checks show lenders are requiring additional assets to secure loans, and hiking rates for hospitals with mediocre credit, but "that has not slowed purchasing in general."
He also said hospitals are rushing to take advantage of the March 2008 economic stimulus package, in which Congress doubled hospitals' potential deduction for equipment expenses to $250,000 through the end of the year.
Ogilvie even said a few financiers he spoke with think lenders are more inclined to loan money to hospitals because of their steady revenue and the potential for the healthcare equipment to generate revenue, compared with borrowers in other markets.
The stock rose $2.86 to close at $253.20.
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