Yesterday, in response to Chasing Value: ISRG is falling and I'm buying I received the following comment from Beltway Greg, "You're a brave dude. Why? I've watched this stock for awhile and I worry about possible entry by other folks into the market."
Brave perhaps, even foolish on occasion, but I still think this is the time to be selectively buying equities.
To those that might be concerned about competition for Intuitive Surgical Inc (NASDAQ: ISRG) you will be interested in the following:
NOTICE TEXT: Department of the Army U.S. Army Medical Command MEDCOM, North Atlantic Regional Contracting Office Subject: Contract prosthetic feet and leg coverings This is a notice of the Governments intent to solicit, negotiate and award a sole source contract (Note 22) contract to Intuitive surgical for Implants based on urgency. This is not a set-aside for small business. This notice is an urgent requirement for Walter Reed Army Medical Center, 6900 Georgia Avenue NW, Washington, DC 20307, contract number W91YTZ-09-P-0147. Parties interested in future announcements shall provide detailed information of their capabilities and certifications to clearly meet the requirements stated above.
It is possible that someday ISRG will have some competition, but there does not seem to be anything on the horizon for now. Furthermore, as the user base expands the barrier to entry increases and the cost of changing systems becomes more challenging.
The most likely scenario for competition would be if another manufacturer were to create a similar system for procedures not yet addressed by ISRG's Di Vinci robotic surgical units. Some of the potential competitors, like Johnson and Johnson (NYSE: JNJ) or Medronic (NYSE: MDT), are actually corporate partners helping to distribute the units world wide. What is most likely from my point of view is that other manufacturers will find a way to partner with ISRG to develop complimentary hardware to expand the capability of the system for more procedures to get to market faster.
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.
Medtronic (NYSE: MDT - option chain) shares are way lower today after the company posted a second-quarter profit of $571 million, or 51 cents per share. The company's adjusted profit of 67 cents per share missed analysts' estimates of 71 cents per share. MDT also lowered their fiscal-2009 EPS forecast by about 3% on both the high and low ends. None of this is helping the stock today. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on MDT.
This morning, MDT opened at $34.49. So far today the stock has hit a low of $31.25 and a high of $35.48. As of 12:30, MDT is trading at $32.24, down $4.18 (11.5%). The chart for MDT looks neutral and S&P gives MDT a 3 STARS (out of 5) hold ranking.
For a bearish hedged play on this stock, I would consider a January bear-call credit spread above the $42.50 range.
Medtronic (NYSE: MDT) closed at $39.93. MDT is scheduled to report Q2 EPS on November 18. MDT November 40 straddle is priced at $3.50, December 40 is at $5.50. MDT December option implied volatility of 54 is above its 26-week average of 32 according to Track Data, suggesting larger price movement.
Covidien (NYSE: COV), a medical solutions device provider, closed at $37.07. COV is scheduled to report Q4 EPS on November 17. COV November 40 straddle is priced at $4.40, December 40 straddle is priced at $6.40. COV December option implied volatility of 58 is above its 26-week average of 32 according to Track Data, suggesting larger price movement.
Abbott Lab (NYSE: ABT) closed at $57.14. ABT December option implied volatility of 42 is above its 26-week average of 32 according to Track Data, suggesting larger price movement.
Stryker (NYSE: SYK), a medical technology company, closed at $47.70. SYK December option implied volatility of 60 is above its 26-week average of 32 according to Track Data, suggesting larger price movement.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Medtronic (NYSE: MDT) is a medical technology company, specializing in a variety of implantable biomedical devices. Leading products include pacemakers, stents, catheters, glucose monitoring systems and insulin pumps. The firm's Cardiac Surgery segment offers products for the repair and replacement of heart valves, surgical accessories, and surgical ablation products. A Physio-Control unit provides external defibrillation and emergency response systems. Medtronic sells its products to hospitals, clinics, third party healthcare providers and governmental healthcare programs. Boston Scientific (NYSE: BSX) and Johnson & Johnson (NYSE: JNJ) are major competitors.
Investors were pleased last week, when Medtronic announced fiscal Q4 EPS of 78 cents and revenues of $3.86 billion. Analysts had been expecting 72 cents and $3.72 billion. Management also guided FY09 EPS to $2.94-$3.02 ($2.96 consensus) and FY09 revenues to $15-$15.5 billion ($15.14 consensus). UBS subsequently reiterated its "buy" rating on the shares.
MOST NOTEWORTHY: Micron, China Sunergy and Medtronic were today's noteworthy upgrades:
Deutsche Bank upgraded shares of Micron (NYSE: MU) to Buy from Hold as they believe improved pricing and the company's cost reductions should drive a strong margin recovery. The firm raised MU's target to $11 from $7.
Jefferies raised China Sunergy (NASDAQ: CSUN) to Hold from Underperform following the company's Q1 beat to reflect its improved outlook for the production of higher efficiency cells and better controls over cash flow measures.
Goldman raised Medtronic (NYSE: MDT) to Buy from Neutral based on potential earnings upside from strong market share and broad distribution.
While medical device maker Medtronic Inc. (NYSE: MDT) reported flat fourth-quarter profit on Tuesday despite strong growth in sales and operating earnings, chip maker Analog Devices Inc. (NYSE: ADI) said its fiscal second-quarter profit increase on higher sales of analog products beat analyst estimates.
Minneapolis-based Medtronic's fourth-quarter profit of $812 million was the same as last year, when the company recorded a tax gain of about $129 million. Adjusted earnings-per-share rose to 72 cents, up from 70 cents per share a year ago, and in line with the estimates of analysts surveyed by Thomson Financial.
Revenue for the quarter rose 18% to $3.86 billion, ahead of analysts' expectations of about $3.72 billion.
For the full year just ended, the company earned $2.23 billion, or $1.95 per share, down from $2.8 billion, or $2.41 per share a year ago. Revenue rose to almost $13.52 billion, up from about $12.3 billion a year ago. Analysts were expecting earnings per share of $2.96 on revenue of $15.1 billion.
Medtronic said it expects to earn $2.94 to $3.02 per share for fiscal 2009, on revenue of $15 billion to $15.5 billion.
Shares rose $1.08, or 2.3%, to $48.96 in trading Tuesday, and rose an additional 19 cents after hours.
After announcing a deal with France's Orange last week, and as the June 9 keynote address from Steve Jobs approaches, Apple Inc. (NASDAQ: AAPL) may be finally close to a deal that would add two of Asia's hottest cellphone carriers, Japan and Korea, to its growing list of international partners. According to reports in Asian news services, Apple is planning a special joint release of the next-generation iPhone with Japan's NTT DoCoMo and Korea Telecom Freetel. That would leave China as the last big Asian market without an authorized iPhone carrier.
According to the Telegraph, Barclays (NYSE: BCS) is considering an acquisition of investment banks and looked at Lehman Brothers (NYSE: LEH) and UBS (NYSE: UBS).
The Wall Street Journal reported that Ford Motor Co. (NYSE: F) is cutting production at its Volvo unit, possibly affecting one-third of the workers, in an attempt to cut costs and losses at the upscale Swedish brand. The cut comes amid speculation that Ford is priming Volvo for a sale.
Shares of medical devices maker Medtronic Inc. (NYSE: MDT) were higher in morning trading after the company reported third-quarter profit that beat analysts' estimates.
For the quarter, Medtronic reported that its profit plunged 89% to $77 million, or 7 cents per share, down from $710 million, or 61 cents per share, in the same period a year ago.
Included in the company's earnings numbers, however, was a $275 million, or 24 cents per share charge related to lawsuit settlements from its recalled Marquis line of implantable defibrillators. Excluding that, Medtronic posted earnings of 63 cents a share. Analysts, on average, expected the company to show earnings of 61cents per share.
Just because a company is in the health are field, it doesn't mean it's a buy. That's because investors have figured out that future demand for a product does not translate into unexpectedly high profit for the companies that meet the demand.
Obviously demand for medical products and services is going to rise as 77 million baby boomers age. But that demand does not necessarily translate into making money -- either in the product or stock markets. Why not? Because the competition is fierce. Not only are rivals going after each other with aggressive marketing but in many cases the government or pharmacy benefit managers are the buyers. And these buyers cap prices -- often at levels that make it difficult for suppliers to make a decent profit.
Furthermore, companies in this industry must invest considerable amounts in R&D to develop new products since they can't rely on profits from products that lose patent protection due to competition from generics. And the success rates of those R&D efforts seem to be dropping -- leaving many competitors with high costs, declining revenues, and uncertain futures.
Yesterday, in response to 
Medtronic
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Shares of medical devices maker 
Cramer on BloggingStocks: A troika of opportunity and trouble 
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