Intuitive Surgical stock dives despite 3Q growth
By
Associated Press
October 17, 2008
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Intuitive Surgical Inc.'s stock sank 12 percent Friday, a day after the maker of surgical robots reported third-quarter results that easily surpassed Wall Street expectations.
Intuitive shares fell $25.67 to $189.13, a "bizarre" movement, according to a research note from Lazard Capital Markets analyst Dr. Sean Lavin.
Sales for the company's da Vinci Surgical System grew 48 percent to $126 million in the quarter. Lavin said in his note he wasn't sure how much longer hospitals will need to keep buying da Vincis before investors believe the sales are sustainable.
Lavin said hospitals will continue buying the systems even if spending and credit tighten, and the stock will rise strongly "when investors look at the cash this company generates and assign a higher multiple."
Intuitive said Thursday net income rose 41 percent to $57.6 million, or $1.44 per share, compared to $40.9 million, or $1.04 per share, in the same quarter last year.
Revenue rose 50 percent to $236 million from $156.9 million a year ago.
Analysts polled by Thomson Reuters expected earnings per share of $1.27 on $226.6 million in revenue.
Intuitive said the jump in da Vinci system sales helped drive the growth. The company also noted that accessories revenue rose 53 percent to $76 million.
Lavin's note said they expect robotic surgery to become the standard of care for many procedures over the next decade.
"We expect Intuitive's margins and earnings to expand as procedure volumes increase, with high-margin disposables becoming a bigger portion of the pie," the note said.
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