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Trade-Ideas: Intuitive Surgical (ISRG) Is Today's "Barbarian At The Gate" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Intuitive Surgical ( ISRG) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Intuitive Surgical as such a stock due to the following factors:

  • ISRG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $179.8 million.
  • ISRG has traded 364,754 shares today.
  • ISRG traded in a range 207.5% of the normal price range with a price range of $15.71.
  • ISRG traded above its daily resistance level (quality: 11 days, meaning that the stock is crossing a resistance level set by the last 11 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock s movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on ISRG:

Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems, and related instruments and accessories. ISRG has a PE ratio of 21.2. Currently there are 9 analysts that rate Intuitive Surgical a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for Intuitive Surgical has been 658,200 shares per day over the past 30 days. Intuitive Surgical has a market cap of $14.5 billion and is part of the health care sector and health services industry. The stock has a beta of 0.62 and a short float of 5.4% with 4.53 days to cover. Shares are down 25.8% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Intuitive Surgical as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, increase in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:

  • ISRG's revenue growth has slightly outpaced the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 7.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ISRG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.22, which clearly demonstrates the ability to cover short-term cash needs.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, INTUITIVE SURGICAL INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Equipment & Supplies industry average, but is less than that of the S&P 500. The net income increased by 2.7% when compared to the same quarter one year prior, going from $154.90 million to $159.10 million.
  • The gross profit margin for INTUITIVE SURGICAL INC is currently very high, coming in at 72.91%. Regardless of ISRG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ISRG's net profit margin of 27.50% significantly outperformed against the industry.

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