Teledoc

brings the doctor to you. Intuitive Surgical made the doctor consistently precise, and metallic. ISRG went on sale last week and this, following a Q1 report badly received. Top and bottom line misses made fans cranky, while coming adds to cap-ex spending created restless departures. Such happens to even the best.

 

Growth stocks come and go, and slow along that path. Look at Apple. ISRG’s assuredly on that path. But where? They’re still innovating, and selling. Handfuls of ISRG fans hit the door even before bothering to understand, or so it seems. That happens too. Good.

Prices plunge when holders run. 7% on Monday. Buyers come in when that’s overdone. Up 1.91% yesterday–Tuesday. We think there’s more to come. Tuesday’s buyers will not be the last. We paid for the office visit. $495.61 a share. But will the surgeon be in for us? Here’s the quick chart of Intuitive’s heart. ISRG.

 

 

Healthcare’s

recent woes were no where to be seen on Tuesday.  Instead the group behaved as shimmering stars.  Why not?  Only Consumer D. nosed ahead.  Absolutely everyone partied, with Centene leading the joyous parade of bubbly goodness, jetting 4.64% on quadruple volume.  Applause.  United Health strolled in 1.53% up on double volume.  Wow–aren’t they bitterly shunned?  Stay focused.  Aren’t these two in fact supposed to be radioactive?  They’re both in part managed care operators.

 

On a record setting day healthcare crushed it.  How broadly?  CNC, UNH, BSX, ALGN, BAX, ED, WCG, LGND, IDXX, were each up greater than 1%.  Recall that medical device makers are radioactive also.  Hum…someone should tell them.  The sudden rush of robust health also included Abiomed(ABMD), and Intuitive Surgical(IRSG), the later up 1.91%.  Oops, wasn’t Q1 a fugly pile?

 

A record day on the street showed healthcare’s lurking strength.  Consumer D. busted a 1.73% move, with Healthcare right behind at 1.58%.  Consumer Staples and Utilities ranked a stinky 9 and 10.  Energy was the sole down play on the day.  Are we rotating out of defense?

 

Five

hundred years after da Vinci we see Intuitive Surgical.  We see their three surgical systems; the da Vinci X, XI, and much newer SP.  They also have a line of three surgical staplers–“chunk chunk.’  The company behind robotic surgery operates on, with Q1 showing a global installed base now at 5114.  Outside U.S.(OUS) ISRG drove a 21% placement growth rate for Q1.  That’s 81 more systems placed.  Each requires instrument replacements and service.  Each represents on-going revenue streams back to Sunnyvale, Intuitive’s home base.

 

The inanimate as surgeon did not appear within de Vinci’s notes.  That came from ISRG.  The da Vinci name now as much signifies this marvelous robotic wave which continues to expand, more internationally now.  Intuitive Surgical owns this space, though Morningstar says rivals are coming.  Q1 was not a crowd pleaser, and that’s why we’re talking about ISRG.

 

Shares dumped nearly 7% of their value on Monday.  We bought a smallish chunk, believing that to be an overreaction.  The top and bottom miss disappointment will not, we feel, change their dominate industry positioning.  Nor will said crimp off revenue from those wonderful recurring instrument and service sales streams.

 

Who

loves a bargain?  We do.  Great companies are savaged regularly.  Any enviable entry point or cost basis is built on bad news, tough times, or hopefully both.  Is Intuitive Surgical a buy?  It’s still hideously expensive.  PEG ration of 4.3.  Nasty.  Resisting top-flight merchandise on sale is almost impossible.  Oops, but isn’t healthcare still loathed, and wrong, and blind–at any price?

 

The war on drugs now centers on Washington, and includes pharmaceuticals and managed care and clever pricey devices.  Well, of course.  The GOP has a bug down it’s shorts over the Affordable Care ACt(ACA.)  The chaoticrats appear to be bizarrely fixated by the doomed notion of Medicare for all in 2020.

 

Have opinions changed just as Washington arms itself for yet another dumbass run at healthcare?  The sector’s traded mostly like a blast-zone.  Think UNH, CNC. Then came Monday.

 

Intuitive Surgical(ISRG), 4-23-19.

ISRG.

Q1.  April 18, Sunnyvale: 18% global procedure growth,  27% growth in da Vinci Surgical Systems shipped–235.  13% growth in installed base, now totaling 5114 worldwide.  Revenues of $974, up 15%y/y.  EPS $2.56($2.61 non-GAAP) per diluted share vs. $2.44 year ago quarter, representing a 3.32% consensus miss of $2.69.

 

The company confirms the upper end of their estimate of 15% to 17% growth rate in global procedures for FY2019.  They remind of high margin instrument and service revenue streams.

 

The current Morningstar report states: “…and in the absence of formidable competitors (for now), Intuitive Surgical should continue to dominate the robotic surgery arena.”

 

“We do believe that growth will start decelerating in a number of areas, with penetration rates hitting a ceiling…The company will increasingly rely on growth internationally, where it has seen more skepticism in the past. That said, we believe Intuitive’s competitive positioning remains superb.” –Alex Morozov, CFA, Regional Director, 15 March 201

 

 

Intuitive Surgical(ISRG), 4-23-19.

Intuitive

Surgical is expensive and maturing.  Some say rivals are on the horizon.  As you just read growth will increasingly rely on convincing the international crowd–like Netflix.  However, ISRG has priced down to $501.75 from it’s recent high of $589.32.  We’re betting that’s overdone.  We’re also keeping in mind that the maturation process is primarily marked by slowed growth.  We don’t plan to stay, but do think ISRG will pay, shorter term.  Good luck. 

 

ISRG Q1 Earnings Press Release

https://investor.intuitivesurgical.com/news-releases/news-release-details/intuitive-announces-first-quarter-earnings

 

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