Intuitive Surgical Faces Setback for Warning Letter - Analyst Blog


Intuitive Surgical, Inc. ( ISRG ) continues to face troubles due to its rudimentary robotic surgical systems. Despite the company's continuous propaganda about robotic-assisted surgery and its aggressive marketing strategy, recent incidents suggest that everything is not well.

An information released by U.S. Food and Drug Administration (FDA) on Dec 3 regarding a warning letter issued by ISRG on Nov 19 mentioning certain problems about their da Vinci robots turned the stock red yesterday.  
The letter stated that da Vinci instrument arms may experience abnormal friction, causing the device to suddenly stall and make an imprecise surgical cut. As a result, the company plans to recall 1,386 da Vinci systems worldwide.

Shares of Intuitive Surgical started trading at a very low-level of $367.49 yesterday, a 1.4% decline compared to the day before. However, they settled down at a higher level of $370.68 at the closing (still reflecting a fall of 0.6%), thanks to the comments by renowned journalist Herb Greenberg, who negated the investor sentiment driving the selloff.  

Several reports have revealed that patients suffered complications or injuries owing to the robotic-assisted surgeries. However, it seems that Intuitive Surgical only cares about promoting the robotic-assisted surgery as an alternative to conventional surgery but their propagative ideas often lacked concrete proof and ignored several complications that could arise due to robotic surgeries.

ISRG generates revenues from da Vinci systems as well as disposable instruments that are replaced after each procedure. da Vinci system uses robots, cameras and a remote-control console to perform gall bladder removals, hysterectomies, cardiovascular operations and prostatic surgeries.

Intuitive Surgical is going through a rough patch this year. Although the company's earnings of $3.99 per share beat the Zacks Consensus Estimate in the third quarter of the year, it fell 10.5% from $4.46 per share in the third quarter of 2012. Revenues in the quarter dipped 7% to $499 million, missing the Zacks Consensus Estimate of $527 million.

Over a year, ISRG shares lost 29.7%. The Zacks Consensus Estimate earnings rose 3.0% to $16.22 for 2013 but fell 2.3% to $17.00 for 2014 over the last 60 days. Currently, the stock has a Zacks Rank #3 (Hold).

Some better-ranked stocks that are worth a look in the medical instruments industry include CryoLife, Inc. ( CRY ), Natus Medical Inc. ( BABY ), and AngioDynamics Inc. ( ANGO ). CryoLife and Natus Medical carry a Zacks Rank #1 (Strong Buy) while AngioDynamics carries a Zacks Rank #2 (Buy).

ANGIODYNAMICS (ANGO): Free Stock Analysis Report

NATUS MEDICAL (BABY): Free Stock Analysis Report

CRYOLIFE INC (CRY): Free Stock Analysis Report

INTUITIVE SURG (ISRG): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ANGO , BABY , CRY , ISRG

More from

Related Videos



Most Active by Volume

  • $16.94 ▼ 0.53%
  • $8.20 ▼ 7.13%
  • $3.68 ▼ 1.34%
  • $18.32 ▼ 3.93%
  • $4.92 ▲ 1.44%
  • $30.04 ▼ 1.69%
  • $7.13 ▼ 14.30%
  • $5.61 ▼ 4.10%
As of 7/6/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by