Intuitive Surgical, Inc. (ISRG), Johnson & Johnson (JNJ): This Health Care Stock Isn’t Out of the Woods

Page 1 of 2

Over the past year, Intuitive Surgical, Inc. (NASDAQ:ISRG) has been mired in a mix of controversy pertaining to the safety of its revolutionary da Vinci surgical robots. Reports first leaked throughout the media questioning the safety of the company’s surgical systems. In fact, CNBC did a detailed report that brought the issue to the forefront of the financial media.

Intuitive Surgical, Inc. (NASDAQ:ISRG)

At the time, those fears were not yet substantiated. It wasn’t clear that the fears surrounding the da Vinci systems would have a negative effect on Intuitive Surgical, Inc. (NASDAQ:ISRG)’s fundamentals. Unfortunately, those fears were in fact realized on July 9, when the company warned investors its second quarter sales will likely disappoint. After an 18% drop in one day, the market is clearly panicking. Is the pervasive fear accurate? Or does the collapse in Intuitive Surgical, Inc. (NASDAQ:ISRG) now represent a buying opportunity?

Things just keep getting worse

There was bad news across the board in Intuitive Surgical, Inc. (NASDAQ:ISRG)’s preliminary second quarter update. The company advised investors that sales growth would come in at about 7% year over year in the second quarter, which would be well below analyst expectations.

Moreover, the company stated its volumes of procedures performed by the da Vinci robots would be hit by slower growth in benign gynecological procedures, due to fewer hospital admissions and a trend towards more conservative treatments.

All told, the warning served as a shock to the market, which now likely believes Intuitive Surgical, Inc. (NASDAQ:ISRG) is finally feeling the effects of widespread doubt as to the safety and cost-effectiveness of its da Vinci robots.

Intuitive Surgical, Inc. (NASDAQ:ISRG) isn’t the only surgical device maker falling on hard times. MAKO Surgical Corp. (NASDAQ:MAKO) has had its own share of problems in recent quarters. The company is struggling to maintain profitability, even though it is reporting strong revenue growth.

To illustrate, MAKO Surgical Corp. (NASDAQ:MAKO) reported 26% first-quarter revenue growth. However, MAKO Surgical Corp. (NASDAQ:MAKO) was unable to turn a profit, losing nearly $10 million during the quarter, or $0.21 per share. This was worse than analyst expectations, which called for a net loss of $0.19 per share.

Not for the faint of heart

Intuitive Surgical used to be a favorite among investors for racking up double-digit quarterly sales and profit growth like clockwork. Investors long favored it and awarded it a valuation profile usually reserved for the market’s best growth stocks.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!