MAKO Surgical Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and MAKO Surgical (MAKO.DL) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

MAKO Surgical is a major play on the innovative trend toward robotic surgical procedures. Yet after seeing substantial growth for years, the company has suffered through a slowdown, and new pressures are weighing heavily on the stock. Let's take an early look at what's been happening with MAKO Surgical over the past quarter and what we're likely to see in its quarterly report on Tuesday.

Stats on MAKO Surgical

Source: Yahoo! Finance.

Will MAKO Surgical heal itself this quarter?
Analysts maintain their cautious stance on MAKO, having cut their call for the quarter by a penny in the past month and having projected larger losses than previously expected for the full 2013 year. The stock, though, has been stuck in reverse, with a loss of nearly 20% just since mid-November.

We've already heard a lot about how MAKO's fourth quarter went, as the company pre-released certain operating results back in January. The company sold 15 of its RIO surgical systems, bringing 2012 total sales to 45 and raising its installed base to 156 systems worldwide. MAKOplasty procedure volumes rose 20% sequentially and nearly 30% year-over-year, while the company's hip procedure counts were up more than 30% from the third quarter.

Yet those who expected growth on the scale that Intuitive Surgical (ISRG 2.21%) has produced have been disappointed with MAKO's slow progress. Although Intuitive sees slower growth rates ahead than MAKO, Intuitive also has almost 20 times the revenue of its smaller rival, and more importantly, it has been solidly profitable for years. That makes Intuitive a better investment in many people's eyes. Moreover, as both MAKO and Intuitive Surgical have to deal with the excise tax on medical devices, it'll take even longer for MAKO to reach profitability.

Still, MAKO has favorable trends supporting its long-term prospects. Hip rivals Stryker (SYK 2.21%) and Johnson & Johnson (JNJ 0.29%) have both had to recall hip implants and face legal liability that could prove problematic for investors. In general, though, both companies have benefited greatly from their orthopedic divisions recently, with demographics supporting calls for increased numbers of procedures as baby boomers age and need more health care. MAKO is arguably a purer play on orthopedics specifically than J&J and has the higher reward of potential hypergrowth.

In its earnings report, it'll be essential for MAKO to demonstrate a viable strategy for boosting sales at an accelerated pace. Otherwise, the risk that the high-growth stock will flame out will continue to hold investors back.

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