Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Intuitive Surgical, Inc. (ISRG) Tanks: Here’s What I’m Doing

Intuitive Surgical, Inc. (NASDAQ:ISRG)After the market closed yesterday, Intuitive Surgical, Inc. (NASDAQ:ISRG) — maker of the da Vinci Robotic Surgical System — announced preliminary results for the second quarter that caused shares to plunge as much as 17% today.

Read below to find out why the reaction has been so negative, and — with Intuitive stock making up over 5% of my real-life holdings — what I’ll be doing as a shareholder.

Moving in the wrong direction stateside
Intuitive Surgical, Inc. (NASDAQ:ISRG) announced that for the second quarter of 2013, revenue would be $575 million. While that’s 7% better than last year, it’s well below the consensus estimate of $630 million.

Just as important, it shows growth slowing dramatically compared to previous years.

Sources: SEC filings, E*Trade.

While procedures and instrument sales were up a healthy 18% — and service revenue was up 14% — it was revenue from the sales of new da Vinci systems that were down 6%. The main culprit behind the miss was a dramatic reduction in the sales of new da Vinci Systems in the United States.

Source: SEC filings.

A perfect storm brewing
This year hasn’t been kind to shareholders of Intuitive Surgical, Inc. (NASDAQ:ISRG) Stock. The FDA announced earlier this year that it was opening an investigation into the company. Though that didn’t yield any earth-shattering findings, it came right in the middle of medical professionals publicly questioning whether the da Vinci System had any real benefits for hysterectomy patients.

Though it’s impossible to tell what’s behind this miss, the company said, “increased economic pressure on hospitals… and moderating growth in our benign gynecologic procedures,” were to blame.

Though I’m no medical professional, as someone who has been following the company for years now, I have two thoughts on what this means.

First, fellow Fool Sean Williams put out an excellent piece on how Obamacare could be affecting domestic weakness. Although hospitals are thought to be a main beneficiary of the new law, Intuitive products are now carrying a heavier tax burden. Even more important, there are a lot of unanswered questions when it comes to costs under Obamacare. And as well all know, with uncertainty comes conservative spending practices, forcing hospitals to put large purchases on hold.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.