INTUITIVE SURGICAL $528.20 (Nasdaq symbol ISRG; TSINetwork Rating: Average) (515-507-5000; www.intuitivesurgical.com; Shares outstanding: 39.3 million; Market cap: $20.8 billion; No dividends paid) makes the da Vinci, a computerized surgical system.
Guided by a miniature camera connected to a 3-D monitor, surgeons use the da Vinci to operate by remotely manipulating tiny robotic arms. This process is safer and much less invasive than regular surgery, and helps cut a patient’s recovery time and post-operative discomfort. It also reduces scarring and infection risk.
In the three months ended December 31, 2011, Intuitive earned $151.2 million, or $3.86 a share. That’s up 24.8% from $121.2 million, or $3.10 a share, a year earlier. Revenue rose 27.6%, to $496.8 million from $389.3 million. Intuitive is debt-free, and holds cash of $2.2 billion, or $55.98 a share.
Revenue from replenishable supplies rose 30.0%. Intuitive gets almost 40% of its revenue from stable and dependable sales of replacement parts, training and other services. That cuts its risk.
The company spends a high 8% of its revenue on research. That lets it introduce new products, such as Single Site, a set of instruments that lets da Vinci Si systems work through a single incision rather than the usual three incisions.
The company’s long-term outlook is positive. More hospitals are using robots to perform a wider range of surgeries, largely because of Intuitive’s successful marketing efforts.
However, hospital budgets are tightening in the U.S., and that could slow Intuitive’s growth. As well, the stock has moved up 62% since August 2011. It now trades at over 37.7 times the $14 a share that Intuitive will likely earn in 2012.
Intuitive Surgical is a hold.
