My Foolish colleague Billy Fisher is spot-on with his history lesson on Intuitive Surgical
Where we part ways is whether or not you should actually buy shares right now at today's prices. After reading his argument, I remain unconvinced that Intuitive is a buy anywhere near $200 a share.
Billy cites a Bear Stearns analyst who says that sales could hit $1 billion by 2009. Maybe they can. That's a 38% annual growth rate from the $373 million racked up in 2006.
Here's the thing. I assumed 30% free cash flow growth over the next five years and 15% for years six to 20 in my discounted cash flow analysis. That got me an intrinsic value for the company right near $210.
The rosy picture painted by my colleague and the analyst community is what's required for you to make any money buying Intuitive right now, and that's what I call priced to perfection. Thanks very much, but I'm going to take a pass.
Fool biotech analyst and health-care sector head Charly Travers does not own shares of any company mentioned in this article. Intuitive is a Motley Fool Rule Breakers recommendation. The Motley Fool has a disclosure policy.