Intuitive Surgical (ISRG -5.58%), the maker of surgical robots and tools for robotic surgery, is taking it on the chin in afternoon trading Monday. Through 2:22 p.m. ET, Intuitive stock has lost 5.5% of its value.
You can blame Deutsche Bank for that.
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What Deutsche says about Intuitive Surgical
Deutsche Bank downgraded Intuitive Surgical stock to "sell" this morning, with a $440 price target implying more than 16% downside.
"Intuitive's da Vinci platform has proven to be among the most disruptive technologies in medtech history," admits the banker, with more than 10,000 systems in service globally, performing more than 3 million robotic surgeries per year.
Nevertheless, Deutsche sees risks in the company's business model, primarily to its "Instruments and Accessories" business, where third-party companies have begun "remanufacturing" old surgical instruments, once produced and sold by Intuitive but later worn out and removed from service. In theory, such instruments would be replaced by new equipment produced (and sold) by Intuitive to its customers. Repair and restored-to-service old instruments, however, could cut into that business, potentially reducing the company's U.S. I&A revenue by as much as 46%, warns Deutsche today in a note covered on The Fly.
Is Intuitive Surgical stock a sell?
How worried should investors be about this? Pretty worried, I think.
Consider that Intuitive Surgical stock sells for a sky-high 82 times trailing earnings at present, and requires a brisk growth rate to justify that valuation. Most analysts only expect the company to grow earnings 16% annually over the next five years, however, which isn't really that fast for a growth stock. And now Deutsche is saying even the "16%" could be at risk?
Sounds like a good reason to sell Intuitive Surgical stock and take some profits, if you ask me.
