This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Intuitive Surgical Has Its Apple Moment

Stocks in this article: ISRG MDT MAKO ARAY AAPL

NEW YORK ( TheStreet) -- When a company is priced to perfection, any hiccup is a disaster.

We found that out last year with Apple (AAPL). We're finding it out this summer with Intuitive Surgical (ISRG - Get Report).

Intuitive prereported its latest quarterly earnings in a press release and missed analysts' estimates.

Revenue will be $575 million against an expected $630 million, and net income will be $160 million instead of $177.7 million.

But the stock dropped more than 17%, losing $2.87 billion in market cap overnight. A few analysts downgraded the stock after the fall, the usual closing of the barn door after the horse has gotten out, and it is losing a few more points Wednesday morning.

Intuitive, which was founded in 1995, according to its company history, has an extremely wide "moat" for its Da Vinci robotic surgery system. The company licensed technology from several universities before entering the market, and no one has yet come close to it.

The system consists of a control station, behind which a doctor sits, and a collection of instruments on robotic arms over an operating table. This allows fine-grained control, a single view of necessary data, a minimally-invasive procedure, and the ability to control multiple instruments at once, according to the Da Vinci FAQ.

The company's moat is made wider as the company gets government clearance for more-and-more types of procedures, as software is added covering more disciplines, and as the system becomes a hospital standard. There are now almost 2,600 Da Vinci suites in operation, in more than 2,000 hospitals.

While Da Vinci is the "Apple" of robotic surgery, there is no "Android." There are small competitors like MAKO Surgical (MAKO), which specializes in orthopedics, and Accuray (ARAY), which focuses on cancer surgery.

Medtronic (MDT) has a one-armed surgical system called O-Arm and a navigation system called StealthStation, but it's far more limited than Da Vinci.

So what happened?

In some ways Intuitive and its customers got sloppy. There were questions about the company's training, lawsuits from some patients, and, most recently, a 483-page FDA report focused on its reporting of mistakes made with the system.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs