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NEW YORK (

TheStreet

)

-- Intuitive Surgical

(Nasdaq:

ISRG

) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow.

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Highlights from the ratings report include:

  • 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 4.07, 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.
  • INTUITIVE SURGICAL INC's earnings per share declined by 10.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTUITIVE SURGICAL INC increased its bottom line by earning $15.96 versus $12.30 in the prior year. This year, the market expects an improvement in earnings ($16.22 versus $15.96).
  • Looking at the price performance of ISRG's shares over the past 12 months, there is not much good news to report: the stock is down 31.81%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Net operating cash flow has declined marginally to $203.80 million or 4.76% when compared to the same quarter last year. Despite a decrease in cash flow of 4.76%, INTUITIVE SURGICAL INC is still significantly exceeding the industry average of -56.64%.

Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems, and related instruments and accessories. Intuitive Surgical has a market cap of $14.45 billion and is part of the health care sector and health services industry. Shares are down 25.8% year to date as of the close of trading on Monday.

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