Intuitive Surgical's technology is minimally invasive, maximally lucrative

Posted Feb 13th 2008 10:36AM by Joseph Lazzaro
Filed under: Stocks to Buy, Intuitive Surgical Inc (ISRG), Technology

The choppy/consolidating (or perhaps worse) market conditions sometimes give the impression that growth plays do not exist, but that is not the case, and one growth company worth reviewing is Intuitive Surgical. (Note: Intuitive Surgical is only for investors who can tolerate high risk.)

Intuitive Surgical (NASDAQ: ISRG) has developed the da Vinci Surgical System of software, hardware and optics that allows doctors to perform robotically-aided surgery from a remote console.

Analysts believe 2008 revenue will move substantially higher on instrument and accessories sales, pricing power and high-definition system upgrades. Yes, high definition is coming to surgery, too.

Longer term, analysts see Intuitive's technology broadening to new surgical procedures. Margins remain massive and are likely to approach 75% in 2008. The Reuters F2008/F2009 EPS consensus estimates for ISRG are $5.05/$6.81.

The risks? Analysts are keeping an eye on ISRG's core component costs, as well on surgical equipment spending trends.

The First Call mean rating for ISRG is: Buy [9 firms]. Mean 2008 target: $330 [high: $360, low: $294].

Stock Analysis: Intuitive Surgical is a high-risk stock not suitable for moderate-risk or low-risk investors. Investors with an investment horizon longer than two years should be rewarded from ISRG's shares. Sell / Stop Loss in this company: $170.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: health care, Intuitive Surgical, ISRG, robotics, surgery, technology