The stock has been moving upward every day for over a week gaining more than 50% in that time. It is up about 11% to $152.00 in mid day trading.
It was only two days ago that I posted Chasing Value: Intuitive Surgical's right price outlining why the stock was a value, but determining the exact value was not possible. If there was anyone that heeded my call then, they must be smiling today.
The stock is up, but the earnings report last week showed only modest performance with profits shrinking 37 percent in the first quarter, partially due to some customers who did buy the system and chose to defer payment.
The company's profit fell to $28.1 million, or 72 cents per share, from $44.8 million, or $1.12 per share, in the first quarter of 2008, however revenue was up slightly to $188.4 million from $188.2 million. The company sold 66 da Vinci systems in the first quarter, down from 74 a year ago. Instrument and accessory sales grew 18 percent to $79.6 million, including $2.1 million in deferred accessory revenue. Service revenue grew 12 percent to $39.3 million.
While I am pleased that the stock is up, I would still exercise some discretion before buying in, if you are not in already. Traders may jump in and out, but for a longer view you need to parcel out your investment so that you don't buy into a frenzy.
- ISRG Employing haptics (the science of computer-aided touch sensitivity), the firm has developed the da Vinci Surgical System, a combination of software, hardware, and optics that allows doctors to perform robotically aided surgery from a remote console.
The truth is that the company has been down with the overall market -- dumb, dumb, dumb, -- short term thinking for one of the most leading edge companies in an expanding market with a monopoly.
I made Intuitive Surgical one of my 2009 stock picks (Chasing Value: 9 picks for 2009 -- APC, GE, ISRG, WFC and more ) based on what I thought was a fire sale and it looks like that was a wise move so far. However, just because the stock is up does not mean I have lost my senses. There is no "right price". But there is a point where value can be found and I still think value can be found in this stock.
Can ISRG be a value at a P/E hovering around 30? Yes, but not as much as it was last week. It is still expanding its number of procedures and types of procedures. It is still 60% off its high of $360. It is still a monopoly, has no debt, is a cash flowing machine and is buying back stock.
From the PR Wire there was this story Chamberlain Group Announces New Uterine Robotic Surgery Training Device which may have added some catalyst to the stock this morning, but I do not know for sure.
So if you own ISRG: hooray! If you are looking for a tech stock this health care medical devices company might fit the bill. If I were to guess whether today's price is too high to low or just right my answer is I don't know. But I do feel confident it will be higher in a year and I have seen no indication of competition on the horizon.
Update: The closing prices was $150.24, up 13.73, or 10.06%
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of ISRG.