Can MAKO Surgical Recover by Year's End?

With half of 2012 in the record books, it's important to take a look at whether the stocks that interest you can live up to their full potential. By making sure you know about a company's future plans and possible challenges, you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at MAKO Surgical (Nasdaq: MAKO). As we saw in our look at MAKO Surgical earlier this month, the medical equipment maker has promising technology in the form of its RIO surgical system for hip and knee surgeries. But sales have been slower than expected, and impatient investors crushed the stock. Can the company ever bounce back? Let's take a quick look at MAKO Surgical's prospects for the rest of the year and beyond.

Stats on MAKO Surgical

Source: Yahoo! Finance.

Will MAKO Surgical ever heal?
MAKO is a classic example of a high-growth stock that got ahead of itself. When you ignore the stock price and just look at the company, it's hard to argue that MAKO doesn't have a lot going for it. With demographics on its side and with Intuitive Surgical (Nasdaq: ISRG) already having done a lot of the heavy lifting in getting medical professionals prepared for robotic systems, MAKO has the opportunity for explosive growth.

But the company has demonstrated twice now that it can't give investors the growth trajectory they'd like to see. Whether it's because hospitals are reluctant to turn away from traditional implants from veterans Zimmer Holdings and Stryker (NYSE: SYK) or simply a matter of short-term economics, MAKO didn't deliver sales in sufficient numbers to justify its formerly high share price.

The main problem MAKO has right now is that it has completely lost credibility with its sales estimates. Having cut guidance on unit sales two quarters in a row, MAKO will have to prove its new numbers are more accurate than the old ones before investors start feeling confident about the company's prospects. With former sales VP Stephen Nunes out, the company may be able to convince big hospital corporations HCA (NYSE: HCA) and Tenet Healthcare (NYSE: THC) that buying RIO systems makes long-run sense.

As analysts' target stock price suggests, it's not realistic to expect MAKO's shares to triple and regain all of their losses. But given enough time, the company could still prove to investors that its innovative technology can make money. The question is whether the company will have enough time to get the job done.

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