) has approved yet another share repurchase program. The board of
directors has authorized a buyback of $779 million in addition to
the existing $721 million pending from earlier programs. This
brings the total value of the buyback program to $1.5 billion.
The approval is an effort by the company to boost investor
confidence following disappointing second-quarter results.
As a part of this authorization, this robotic surgery device
maker forged an accelerated share repurchase program with
The Goldman Sachs Group
). As per the terms of the deal, ISRG will buyback $500 million
of its common stock from Goldman, most of which will be
repurchased within 2 weeks and the rest by Oct 29, 2013.
Management plans to fund the program through cash and
investments. The company exited the last reported quarter with
cash, cash equivalents and investments of about $3 billion (up
15.1% year over year).
The share repurchase program will likely boost Intuitive's
earnings. However, we believe serious fundamental issues along
with a weak near-term outlook will remain concerns for ISRG.
Intuitive reported disappointing second-quarter results with
earnings of $3.90 missing the Zacks Consensus Estimate by 3.70%.
The Zacks Consensus Estimate for 2013 declined 12% to $15.78 over
the last 30 days.
Revenues, too, substantially lagged the mark by $17 million.
Lower sales of the flagship da Vinci product is the prime matter
of concern. Sales of the da Vinci product in the second quarter
decreased to 90 in the U.S. from 124 in the year-ago period.
The weak performance compelled the company to lower its guidance
for 2013. Due to soft capital sales of the da Vinci system, the
company lowered its revenue expectation to flat to 7% for 2013.
Previously, ISRG had provided its sales growth guidance in the
range of 16% to 19% for the year.
We believe that the company's products will experience severe
headwinds due to the stiff capital spending environment and
sluggish benign gynecologic procedures in the U.S. Moreover, a
warning letter from the U.S. Food and Drug Administration (FDA)
adds to the woes.
The stock carries a Zacks Rank #5 (Strong Sell). While we
strongly recommend avoiding this stock, medical stocks such as
) are worth considering. Both these stocks carry a Zacks Rank #2
GLOBUS MEDICAL (GMED): Free Stock Analysis
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IDEXX LABS INC (IDXX): Free Stock Analysis
INTUITIVE SURG (ISRG): Free Stock Analysis
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