During my various commutes over the past week I have been hearing a new radio commercial about Intuitive Surgical Inc. (NASDAQ: ISRG). The City of Hope Hospital in Los Angeles is advertising their Di Vinci robotic surgical procedures to attract patients.
They use the catch phrase "The science of saving lives" while promoting less invasive surgical procedures, shorter hospital stays, and faster recovery. These are well-known themes among the medical profession and investors but it is the first time I have heard the story promoted for a competitive advantage among hospitals. I am sure it won't be the last.
Certainly this will raise the bar among other hospitals competing for similar business and simply to keep their Di Vinci operating rooms productive, cost effective, and profitable. It also means that any hospital without the equipment will soon be deemed second rate, if they are not already.
Perhaps we will soon be hearing competing hospitals bragging about having multiple Di Vinci's or more trained doctors or the highest number of procedures or new procedures. Where will it end? When it is common place and every hospital is using the system.
Have you heard any radio advertising from hospitals in your city? Fans of Elvis Costello can check out Radio, Radio" at Last fm. here.
ISRG closed last Friday at $299.17 and is trading down slightly this morning. It has been hovering around $300 for the past two weeks.
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 currently own shares of ISRG and have no relationship whatsoever with "Last fm" ,but I was reminded of the song and it is way cool.
This week's Barron's (subscription required) finally had Intuitive Surgical (NASDAQ: ISRG) on its cover, and cover it it did, but with a wet blanket.
The stock is down in early trading today, but that is probably warranted given the runup last week when it jumped $52 in one day after it reported one more mind boggling quarter. I only exaggerate slightly as the company beat estimates by 10 cents a share and increased margins in all areas, when I reported then, Chasing Value: Intuitive Surgical beat the street AGAIN!
The Barron's story, Surgical Robot Cuts Both Ways by Andrew Barry questions the stock's valuation and the company's projections of expanding sales and service figures.
Mr. Barry points out that the stock is trading at sky high valuations and that any disappointment could result in a 25% drop in the stock price. I would remind ISRG fans and stock watchers that this has happened on many occasions without any bad news. It had reached a high around $360 per share and then traded down until it took a dive into the $240s when Wall Street decided that the slowing economy and tighter fiscal restraint on the part of hospital administrators would dampen ISRG's prospects in the second half of 2008.
My favorite company, Intuitive Surgical Inc. (NASDAQ: ISRG), the maker of the da Vinci Surgical System reported earnings Tuesday afternoon that creamed Street guesstimates by 10 cents per share. Intuitive posted earnings per share of $1.28 versus analyst consensus of $1.18.
For the 23rd quarter in a row, just like clockwork and without missing a beat, Intuitive's top and bottom line growth simply ignored the global economy, blazing its own trail. I wonder how ISRG would have done if the economy was not in the dumps?
Overall, second quarter revenue shot up 56% from $142.2 million to $219.2 million. Instruments and accessories revenue increased 61% to $73.6 million from $45.8 million. Training revenue increased 44% to $29.4 million from $20.3 million during the second quarter of 2007.
Lonnie Smith, Chairman and CEO of Intuitive Surgical, said, "We are pleased with our second quarter revenue and earnings growth. These results reflect the continued adoption of the da Vinci Surgical System platform across a broadening group of surgical procedures."
Six months of 2008 are now behind us and the stock market has not been a friendly place to most investors. Stability that was once found in household names that were industry giants is gone, and they have now been brought to their knees.
Many of them were the stocks we might have looked to in the past for stability, so you can be sure I put forward my five candidates with a little trepidation, but forward I go anyway. First a little review is in order.
Citigroup Inc. (NYSE: C) dropped from around $53 per share last year to around $30 in January and we can buy it today for around $17. Even at that price Goldman Sachs (NYSE: GS) has downgraded it to a sell and thinks there is more bad news to come. Citigroup was the largest bank in the world. Not any more.
General Motors (NYSE: GM) was the largest car maker in the world. That was before the stock tumbled from $43 to its current $11 range. A crushing blow to long time investors hoping that someone in the company could stop the ship from sinking.
MOST NOTEWORTHY: Lehman Brothers, Nokia and Intuitive Surgical were today's noteworthy initiations:
Morgan Stanley initiated Lehman Brothers (NYSE:LEH) with an Overweight rating and $31 target. The firm believes Lehman's discount to book value prices in significant write-downs.
Bernstein believes Nokia (NYSE:NOK) will see a slowdown in demand for devices and could loss market share. Shares were initiated with an Underperform rating.
Merriman assumed Intuitive Surgical (NASDAQ:ISRG) with a Neutral rating and believes the tightened credit markets could impact capital equipment spending for small and mid-sized hospitals. They find shares appropriately valued at current levels.
MOST NOTEWORTHY: SonicWALL, DG FastChannel and Thomson Reuters were today's noteworthy initiations:
B. Riley believes SonicWALL's (NASDAQ: SNWL) long-term outlook should benefit as the company specifically targets the SMB IT security market and is increasing its focus on the Asian and Latin American markets. Shares were initiated with a Buy rating and $14 target.
Merriman started DG FastChannel (NASDAQ: DGIT) with a Buy rating and believes the recent closing of the Vyvx acquisition and anticipated closing of the Enliven acquisition could create positive catalysts for the stock.
Citigroup assumed Thomson Reuters (NASDAQ: TRIN) with a Hold rating. The firm finds the valuation full at current levels and prefers to wait for a better entry point.
OTHER INITIATIONS:
Ameristar Casinos (NASDAQ: ASCA) was initiated with an Overweight rating and $26 target at Thomas Weisel.
After a tough day yesterday Chasing Value: Intuitive Surgical confounds Wall Street and closed down to a recent low of $274.75. It opened up today on the news and is currently trading up about 4% to $285 per share, in a market that is trading down across the board.
The following five-year chart illustrates the rapid rise of this highly specialized company that produces a robotic surgical device called the "da Vinci System". They own all the patents for the hardware, software, replacement parts, and service contracts too. That is one big moat around this company.
If you were following my post last year you might have read Serious Money: You asked about Intuitive Surgical? when ISRG was trading in the low $120's. Since that time it has reached $359.59 -- not a bad return. I have been following ISRG since the beginning and own shares at $7.70 the lowest entry point possible post IPO.
The irony of this story is that I also recommended Bear Stearns last year so my best stock pick ever is replacing one of my worst. Intuitive Surgical belongs on your watch list, and if it dips again during the sumer doldrums perhaps there might be another buying opportunity.
UPDATE: ISRG finished the day at $284.77 up $10.02 (+3.65%)
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.
It was reported today that robotic surgery company Intuitive Surgical, Inc. (NASDAQ: ISRG) may not meet analysts average revenue expectations for 2008 and this is driving shares down $7.00 hovering around $281 per share.
Although the company guidance discussed figures around $850 million while the analysts were GUESSING $873 million temporary disappointment is affecting trading. Despite this, Eli Kammerman of Cowen & Co is maintaining his "Outperform" rating saying that he expects Intuitive to beat Wall Street expectations, and that the shares will outpace the market by 15 percent to 20 percent over the next 12 months.
So earnings might be in question, the stock is bouncing, the outperform rating is intact, and everybody still loves Intuitive -- but the stock is down so far on what is an up day. It was only a month ago I posted something similar Chasing Value: Intuitive Surgical drops on analyst disappointment after ISRG report actual earnings. If not for the analysts where would we find opportunity?
Is this a buying opportunity or signs of a week market? That answer involves more guessing, but if the stock trends down more, than it is more of an opportunity, which means you should have this world class medical device company on your watch list.
UPDATE: closing price $274.75 ,-$13.90(-4.82%)
EXTENDED HOURS:$289.00, +14.25 (5.18%) on news that ISRG will replace Bear Stearns in the S&P 500.
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.
While analysts have proven over and over again that they are human (can't be more polite than that) the impact that they have on short-term stock values is clear. Intuitive Surgical Inc. (NASDAQ: ISRG), which closed yesterday at $348.50, dropped to $310.54 at the opening bell and is now trading at $292.00 as I type away. I will report the closing price in an update, but for now the stock has been hit hard -- down over 16%.
ISRG the maker of the da Vinci system, which uses robotic equipment and computers to do minimally invasive surgical procedures disappointed analysts and the stock was punished. Interestingly ISRG reported strong growth and even a positive outlook, however, that outlook was not as glowing as analysts expected and the result is not pretty. Does this mean that the company is not doing very well -- no. Does this mean that the stock price will not be higher next year than it is today -- the answer is no again.
What it does mean is that like other stocks with nosebleed valuations, such as Intuitive's with a trailing P/E of 80, they remain hypersensitive to the slightest deviation from expectations, reasonable or not. This happens even when Intuitive Surgical Q1 profit almost doubled.
Intuitive Surgical (NASDAQ: ISRG), a developer of technology for doctors to robotically perform surgery, is up over $6 (1%) to $346 after closing yesterday at $339.80.
ISRG is scheduled to report Q1 EPS on April 17. ISRG April 340 straddle is priced at $42.90, May 340 straddle is priced at $58.90 according to Track Data, suggesting larger price movement.
Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Today's markets could have actually been a lot worse. Oil rose $1.63 to $111.77 per barrel, making $100 ancient history. The March retail sales numbers would have been great at the +0.2% reading except for the fact that it was due to higher gas prices paid at the pump; otherwise sales would have been flat. In the environment of weak spending, that might still be a win. After everyone's favorite conglomerate killed the markets Friday, these small losses are a win. Below are the unofficial closing levels:
MOST NOTEWORTHY: Mortgage Insurers, Thoratec Laboratories and Callaway Golf were today's noteworthy initiations:
Keefe Bruyette resumed coverage of Old Republic (NYSE:ORI), MGIC Investment (NYSE:MTG), PMI Group (NYSE:PMI) and Radian (NYSE:RDN) with Market Perform ratings and a $16 target, $13 target, $7 target and $6.50 target, respectively, as they expect increased capital needs to generate operational headwinds in the near-term.
JMP Securities expects FDA approval of Thoratec's (NASDAQ:THOR) next generation HeartMate II VAD any day now and for the company to meet/beat 2008 sales guidance. Shares were started with an Outperform rating and $20 target.
Callaway Golf (NYSE:ELY) was assumed at Stephens with an Overweight rating and $19 target. The firm is positive on Callaway's leadership position, strong balance sheet, new products and international opportunity.
During my various commutes over the past week I have been hearing a new radio commercial about Intuitive Surgical Inc. (NASDAQ: ISRG). The City of Hope Hospital in Los Angeles is advertising their Di Vinci robotic surgical procedures to attract patients.
This week's 
Six months of 2008 are now behind us and the stock market has not been a friendly place to most investors. Stability that was once found in household names that were industry giants is gone, and they have now been brought to their knees. 
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Last night 
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Here are some highlights from this past week's 
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Does GM deserve a taxpayer bailout?
Boeing could lose $3.5 billion per month if machinists strike
Cramer on BloggingStocks: Dell loses its Street cred once again 
