An even bigger competitor, which is involved some of the same work as MAKO, is Johnson & Johnson (NYSE:JNJ) , which has a unit focused on orthopedic devices that generates more than $6 billion in revenue annually — in addition to other medical device businesses. Stryker Corporation (NYSE:SYK) and Zimmer Holdings, Inc. (NYSE:ZMH) are also working in orthopedic devices. Zimmer recently received the FDA’s blessing for a new guidance system for knee replacement procedures. Meanwhile, there’s a new competitor on the block — Blue Belt Technologies, with an FDA-approved orthopedic robotic surgical system.
Finally, there’s the new 2.3% tax on medical devices that companies such as MAKO will be required to pay. And as my colleague Dan Carroll has pointed out, it will hit unprofitable companies such as MAKO hard, as they won’t be able to pay it out of earnings.
Given the reasons to buy or sell MAKO Surgical, it’s not unreasonable to decide to just hold off on it. You might want to wait for it to be offering machines that perform a wider range of procedures, or for its net losses to turn into net gains, ideally for a string of quarters.
You might also check out some other interesting related companies, to see if they seem like better bargains than MAKO. Perhaps take a look at Accuray Incorporated (NASDAQ:ARAY) , which specializes in radiosurgery and radiotherapy. Its stock is down some 42% over the past year, leading some to see it as bargain-priced now, with a recent price-to-sales ratio below 1. But it recently projected declining revenue due to manufacturing and supply issues. It’s worth learning more before jumping in.
I’m actually a shareholder in MAKO already, though I’m underwater on it. It does seem potentially promising to me, but it’s far from low-risk. Everyone’s investment calculations are different, though. Do your own digging and see what you think. The company may perform spectacularly in the coming years, but remember that there are plenty of compelling stocks out there.
The article Buy, Sell, or Hold: MAKO Surgical originally appeared on Fool.com and is written by Selena Maranjian.
Longtime Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Johnson & Johnson, MAKO Surgical, and Intuitive Surgical. The Motley Fool recommends Intuitive Surgical, Johnson & Johnson, and MAKO Surgical. The Motley Fool owns shares of Intuitive Surgical, Johnson & Johnson, and Zimmer Holdings.
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