INTUITIVE SURGICAL $574 (Nasdaq symbol ISRG; TSINetwork Rating: Average) (515-507-5000; www.intuitivesurgical.com; Shares outstanding: 39.8 million; Market cap: $22.8 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, 2012, Intuitive earned $174.9 million, or $4.37 a share. That’s up 15.7% from $151.2 million, or $3.86 a share, a year earlier. Revenue rose 22.6%, to $609.3 million from $496.8 million. Intuitive is debt-free and holds cash of $2.9 billion, or $72.86 a share.
Revenue from replenishable supplies rose 29.0%. Intuitive gets over 40% of its revenue from stable and dependable sales of replacement parts, training and other services. That cuts its risk.
Accessories make the da Vinci better
The company’s long-term outlook is positive, as more hospitals are using robots to perform a wider range of surgeries. The company is also gaining from new products, such as Single Site, a set of instruments and accessories that let da Vinci systems work through a single incision rather than the usual three incisions.
However, hospital budgets remain tight in the U.S., and that could slow Intuitive’s growth. As well, the stock trades at over 32.8 times the $17.50 a share that the company will likely earn in 2013.
Intuitive Surgical is a hold.
