Intuitive Surgical, Inc. (ISRG): Is Growth Over?

Similar to Intuitive Surgical, Inc. (NASDAQ:ISRG), MAKO Surgical Corp. (NASDAQ:MAKO) is expected to face headwinds as hospitals are hesitant to increase capital expenditures. The Obamacare tax increase on medical device sales could further damage the company’s top line. Unlike Intuitive Surgical however, Mako Surgical is currently unprofitable and analysts do not expect any profit next year. Mako shares are down 3% year to date and have an average analyst price target of $15.56.

iRobot Corporation (NASDAQ:IRBT) makes consumer household robots such as the Roomba and the Scooba. The household robots segment account for nearly 90% of iRobot’s revenues and is growing at a 25% annual clip. With revenues around $500 million per year and the total addressable market for iRobot’s products around $14 billion, iRobot has a lot of room to grow.

Analysts are expecting the company to grow earnings by 9.1% annually over the next five years, but they have largely written off the launch of iRobot Corporation (NASDAQ:IRBT)’s next product, the Ava 500, a telepresence robot designed for the enterprise market. According to iRobot, the telepresence market could be another $14 billion dollar opportunity and any traction made in that market could send growth soaring. Shares of iRobot have rallied 84% year to date and could rally further.

Conclusion

Intuitive Surgical, Inc. (NASDAQ:ISRG) shares are trading at 22 times this year’s earnings and 19 times next year’s earnings. It has no debt, and $75 cash per share on hand. The stock is trading at a low P/E. But there are storm clouds on the horizon. As second quarter results showed, the demand for da Vinci systems may not be as robust as it was in the past. Expecting growth to re-accelerate is no sure thing, and investors may have to wait a long time for fundamentals to catch up with the price. It is better to stay on the sidelines.

The article Intuitive Surgical: Is Growth Over? originally appeared on Fool.com and is written by Jason Bond.

Jason Bond has no position in any stocks mentioned. The Motley Fool recommends Intuitive Surgical, iRobot , and MAKO Surgical. The Motley Fool owns shares of Intuitive Surgical. Jason is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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