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An Attractive Time to Invest in Robotic Surgery – Intuitive Surgical, Inc. (ISRG): MAKO Surgical Corp. (MAKO)

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Intuitive Surgical Inc (ISRG)Intuitive Surgical, Inc. (NASDAQ:ISRG) is widely known for its successful da Vinci robotic surgical system, which is used for a wide variety of minimally invasive surgeries. The da Vinci system consists of robotic arms equipped with surgical equipment and a high-tech camera system, which provides a 3D image to a nearby console operated by the physician. Some of the documented and proven benefits over conventional surgery are a reduced size of the incision, less scarring, quicker recovery time, and a reduced level of pain. There are about 2500 da Vinci systems installed worldwide that have been used to perform millions of successful minimally invasive surgeries.

Intuitive Surgical, Inc. (NASDAQ:ISRG) has created a large amount of wealth for early investors, increasing from about $8/share to about $600/share over the last decade. However, the share price has dropped about 20% to below $460/share due to a couple of recent reports questioning the advantages of robotic surgery over conventional surgery. Also, a probe by U.S Regulators to investigate the cause of incidents has also contributed to this decline. This decline has provided an opportunity for investors to get in at a very attractive price.

Reasons to Invest in Intuitive Surgical

Intuitive Surgical, Inc. (NASDAQ:ISRG)’s financial results have been excellent. Over the last five years, sales have increased from $875 Million to $2.2 Billion and net income has increased from $200 Million to $650 Million.

A growing portion of Intuitive Surgical’s sales are due to recurring revenue, which consists of a wide variety of accessories used for each surgery. Recurring revenues in 2012 were $1.25 Billion, or 57% of total revenues. This is the classic razor blade business model.

The types of surgeries have increased over time. Current surgery types performed by the Da Vinci include urology, gynecology, cardiology, general surgery, and head and neck surgery. There is potential for the surgery types to be expanded in upcoming years.

Conventional surgery is the main form of competition. There are other robotic surgical companies that are currently used for different types of procedures. MAKO Surgical Corp. (NASDAQ:MAKO) is a company that utilizes robotic surgical technology in a different way. MAKO Surgical Corp. (NASDAQ:MAKO) markets its MAKOplasty orthopedic procedures to treat early to mid-stage osteoarthritis of the knee and to complete total hip replacements. The RIO Robotic Arm Orthopedic System is used to provide reproducible precision for MAKOplasty procedures. MAKO Surgical Corp. (NASDAQ:MAKO) is also trading at an attractive price at $12.25, which is well below its all-time high of over $40/share.

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