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Intuitive Surgical: Buy the Dip?

By Cory Renauer - Jan 22, 2021 at 7:06PM

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Pandemic-fueled clampdowns on nonessential surgeries in key markets upset investors today.

Shares of Intuitive Surgical (ISRG -2.52%) dipped about 7% on Friday after an earnings call the previous afternoon reminded investors that the coronavirus pandemic isn't over yet. The pioneer in minimally invasive robotic surgical systems met expectations in the fourth quarter. Still, comments regarding further delays in elective surgeries around the world didn't sit well with investors today.

Is this recent dip an opportunity to buy a healthcare stock that could make you rich at a discount, or should investors worry about more coronavirus pressure ahead?

Scientist with a clipboard.

Images source: Getty Images.

At recent prices, Intuitive Surgical stock trades at about 21 times total revenue reported over the past year. That seems like a lot to pay for a company that only grew revenue by 4% year over year in the fourth quarter, especially after the management warned investors there could be another couple of lackluster quarters ahead. 

Why you should buy Intuitive Surgical stock now

Successful investors work with decades-long timelines. When smoothed out over the long run, some pressure in the next few quarters won't make a big difference. The procedures that aren't being performed will be rescheduled, not canceled. 

While the number of new systems shipped in the fourth quarter fell 3% year over year, the company makes most of its money on sales of instruments and accessories that must be replaced more frequently. 

We can already see the company's resistance to temporary lockdowns caused by the pandemic. In the fourth quarter, the number of procedures performed rose 6% and revenue from instruments and accessories grew 11% year over year. Once coronavirus vaccine distribution catches up with demand, patient shareholders can look forward to more impressive quarterly reports. 

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Intuitive Surgical, Inc. Stock Quote
Intuitive Surgical, Inc.
$218.05 (-2.52%) $-5.64

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