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. 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 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 feeble growth in the company's earnings per share.
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- 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 gross profit margin for INTUITIVE SURGICAL INC is currently very high, coming in at 71.48%. 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 31.42% significantly outperformed against the industry.
- Despite the weak revenue results, ISRG has outperformed against the industry average of 26.1%. Since the same quarter one year prior, revenues slightly dropped by 7.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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. We feel it is likely to report a decline in earnings 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. For the next year, the market is expecting a contraction of 1.7% in earnings ($15.69 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 25.04%, 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.