Friday, October 18, 2013

The Motley Fool: Intuitive Surgical In The Penalty Box

Surgical robot manufacturer Intuitive Surgical  (NASDAQ: ISRG  ) has committed the cardinal sin for high-multiple growth stocks -- the growth has stopped. Investors need only pull up a chart of Heartware or Edwards Lifesciences to see what happens when the music stops and growth investors can't find enough chairs. Intuitive is going to need to show convincing improvements in system placements and procedure volumes to regain the Street's love. Unfortunately, I think that will take a few quarters at a minimum.

I feel like I am in a strange place with Intuitive. Above $450 a share, where the stock has spent most of the past two years, I thought the shares were overvalued and that almost everything had to go right for the stock to work from those levels. Although I wouldn't go as far as to say that Intuitive has been beaten into a value stock, I do believe that robot-assisted procedures are here to stay and that Intuitive has a major lead on any prospective rivals. Moreover, with growth harder to come by in the device world these days, maybe Intuitive could actually find itself in play if the stock languishes further.

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