Intuitive Surgical, Inc.
) rose 4.6% to $380.99 yesterday following an upgrade by a
brokerage firm rendering a favorable long-term view, we remain
skittish about its near term outlook and the future of
robotic-assisted surgery, which the company is desperately trying
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Despite the rise, shares of ISRG are still hovering around
52-week low. Following its disappointing earnings release on Jul
18, the stock has not seen any upward estimate revisions, but
only downward revisions for the full year 2013 and 2014.
Consequently, the stock has a Zacks Rank #4 (Sell).
In the second quarter of the year, Intuitive Surgical failed to
meet the Zacks Consensus Estimate both in terms of earnings (by
15 cents) and revenues (by $17 million). Further, ISRG
significantly lowered its 2013 guidance based on its dismal
performance in the quarter.
Due to soft capital sales of the da Vinci system, ISRG lowered
its revenue expectation to flat to 7% for 2013 compared with the
earlier range of 16% to 19% for 2013. It forecasted operating
margin in the band of 37% to 38% compared with the earlier
outlook of 38% to 39% for 2013.
Intuitive Surgical also lowered its procedure growth outlook to
the range of 15%-18% compared to the previously guided range of
20%-23%. This was mainly due to moderate growth in U.S. benign
Despite the U.S. Food and Drug Administration (FDA) approval for
the company's surgical robots in 2000, it is undoubtedly riddled
with several complications and customer complaints. Several
reports have revealed that patients suffered complications or
injuries owing to the robotic-assisted surgeries. Surgical robots
are generally used to perform gall bladder removals,
hysterectomies, cardiovascular operations and prostatic
However, it seems that Intuitive Surgical only cares about
promoting the robotic-assisted surgery as an alternative to
conventional minimally-invasive surgery by propagating ideas
through billboards, radio, television and YouTube. These
propagative ideas often lacked concrete proof and ignored several
complications that could arise due to robotic surgeries.
While we stay away from ISRG for now, other stocks that are
currently worth a look in the medical instruments industry
) with a Zacks Rank #1 (Strong Buy), and
Mindray Medical International Ltd
Echo Therapeutics, Inc.
), both with a Zacks Rank #2 (Buy).