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Why MAKO Surgical Corp. (MAKO) Earnings Won’t Rebound Soon

MAKO Surgical Corp. (NASDAQ:MAKO) will release its quarterly report on Tuesday, and investors are preparing for another substantial loss from the robotic-surgery system maker. Despite the promise of the company’s technology as another step forward for medical science, MAKO Surgical Corp. (NASDAQ:MAKO) earnings face the challenges of slow growth, high taxation, and general criticism of the industry.

MAKO Surgical Corp. (NASDAQ:MAKO)

One problem with being in an innovative industry is that the actions of competitors can reflect badly on your profit. That’s part of what MAKO Surgical Corp. (NASDAQ:MAKO) has had to face lately, as rival Intuitive Surgical, Inc. (NASDAQ:ISRG) has borne the brunt of criticism for its da Vinci robotic-surgical system. Yet, MAKO Surgical Corp. (NASDAQ:MAKO) also has its own issues to overcome in returning to a higher-growth trajectory. Let’s take an early look at what’s been happening with MAKO Surgical over the past quarter, and what we’re likely to see in its quarterly report.

Stats on MAKO Surgical

Analyst EPS Estimate ($0.21)
Year-Ago EPS ($0.20)
Revenue Estimate $28.85 million
Change From Year-Ago Revenue 22%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

When will MAKO earnings become profitable?
Analysts have gotten more pessimistic about the prospects for MAKO Surgical Corp. (NASDAQ:MAKO)  earnings in recent months, widening their June-quarter loss estimates by $0.06 per share, and predicting more extensive losses for the full 2013 year, as well. The stock has managed to rebound from its swoon earlier in the year, however, with gains of 18% since late April.

Most of MAKO Surgical Corp. (NASDAQ:MAKO)’s share-price gains came early in the quarter, after MAKO reported better-than-expected revenue in its first-quarter results. Losses also narrowed, with the company selling five of its RIO systems, all of which included an upgrade to allow for total hip arthroplasty procedures. Growth in procedure counts hit 30% year over year, with substantial gains in hip procedures pointing to the potential of that niche.

Despite differences in their businesses, MAKO investors continue to look at Intuitive Surgical as a guide to where the overall industry is going. As a result, Intuitive Surgical, Inc. (NASDAQ:ISRG)’s recent pre-announcement that its revenue and earnings would fall well short of expectations due to poor sales of its da Vinci systems hurt MAKO’s stock, as well. Even in the wake of claims that certain da Vinci procedures don’t add enough value to justify the extra expense of using the system, MAKO has been diligent in releasing clinical research that points to the benefits of the RIO system in reducing pain and improving overall accuracy.