Next Tuesday, MAKO Surgical (MAKO +0.00%) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.
Until recently, MAKO Surgical's success with its RIO robotic surgery system for orthopedic procedures seemed almost assured, as the company was on the cutting edge of a promising new industry. Lately, though, troubling questions have arisen that could hurt MAKO's prospects going forward. 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 report.
Stats on MAKO Surgical
|
Analyst EPS Estimate |
($0.19) |
|
Year-Ago EPS |
($0.28) |
|
Revenue Estimate |
$24.82 million |
|
Change From Year-Ago Revenue |
26% |
|
Earnings Beats in Past 4 Quarters |
2 |
Source: Yahoo! Finance.
Will MAKO Surgical's earnings ever fully recover?
In recent months, analysts have gotten slightly less optimistic about MAKO's earnings prospects, widening their loss estimates by $0.03 per share for the first quarter and double that for the full 2013 year. But the stock has languished under more dramatic losses, with the stock falling nearly 15% since late January.
A combination of factors has hit MAKO hard this year. The implementation of Obamacare's medical device excise tax will force the unprofitable company to pay 2.3% of its gross sales. Moreover, weaker-than-expected sales of its RIO systems in 2012 led the company to miss earnings projections, and the guidance it gave in February for 2013 sales was uninspiring.
MAKO also had to deal with legal issues during the quarter. It filed suit against competitor Blue Belt Technologies over alleged violations of a non-competition agreement with a former sales manager who went to work for Blue Belt. Meanwhile, after filing suit against Stanmore Implants earlier in the quarter, MAKO settled last month, agreeing to buy Stanmore's robotic assets and removing a potential competitive threat.
Arguably, though, the worst news for MAKO came from competitor Intuitive Surgical (ISRG +0.72%), which faces controversy over its da Vinci surgical system. The FDA recently announced it would investigate Intuitive's device in light of lawsuits filed by patients alleging injuries and deaths as well as comments from medical experts that the devices add expense without corresponding medical benefits. Although the two companies don't overlap as much as you might think in terms of medical procedures, MAKO is likely to suffer from any fallout from Intuitive's problems.
In MAKO's earnings report, watch for more detail on how the company plans to make use of its new Stanmore assets to bolster its business. Intuitive Surgical's problems could be an opportunity for MAKO to stand out from its better-known peer and demonstrate a competitive advantage.
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