Intuitive Surgical Rises on S&P News; Lowers Revenues Guidance

Intuitive Surgical (ISRG) was up Friday on news that it will be added to the Standard & Poor's 500. This will increase demand for shares of the medical device maker because all of the index mutual funds, exchange traded funds and other investors that focus on S&P 500 stocks will buy the shares.

The big news, however, is that Eli Kammerman, an analyst at Cowen & Co., reported that ISRG has cut its revenues forecast for 2008 by about 2.3% to $850 million, which is a disappointment to shareholders. Based on previous guidance from the company, the average projection by analysts was $873 million. The AP says Kammerman maintains his outperform rating on ISRG.

For some time, I've been questioning ISRG's ability to make its projections, given the impact of tight credit markets on hospitals' capital spending budgets and the rather long paybacks that ISRG's da Vinci surgical system offers users. The device appears to be great for patients but not so profitable for hospitals. I have blogged on ISRG here and here.

Morningstar.com continues to give ISRG one star out of a possible five and continues to estimate the stock's fair value at $175. ISRG's daily and weekly charts are bearish, and the $283.40 stock's bearish price objective is $240. Price objectives should be used as guides and not as predictions. A month ago, when ISRG was trading around $288, its price objective was $272.

Full disclosure: I don’t own ISRG.

Comments

[Polaris]

Here you go again with your misleading headlines.

Why do you people persist with the lie that this company reduced its forecast?

It did NOT

Please get your facts straight before you set pen to paper.

A professional journalist would check all sources first, including the transcript of the company's CC. This is more that just careless reporting . The facts have been drawn to your attention many times.

Or perhaps it was your intention to damage the reputation of this company.

You have brought the reputation of this messager board into dispute - no one can now beleive a word you and you co-conspiritors write.

You are no more thatn a group of charlatan hacks.

[speculari]

In addition, we all know what a boor Eli Kammerman is!

[BirnBran]

ISRG did not lower revenue guidance. All five guidance items put out on the Q1.08 earnings conference call remain in place and were reiterated by the company. Eli misintrepreted Finance VP's comments at the Citibank investor conference, where he reiterated the guidance but used dollar estimates instead of percentages. Analysts have estimated and continue to estimate that ISRG will beat that guidance. Hence ISRG revenue guidance is less than the street. Eli Kammerman published a clarification later that day in a new first call note.

[MedTechInvestor]

It is just incorrect to say that ISRG lowered guidance. They said on the Q1 CC that they would grow revenue by 42% this year which works out to almost exactly the 850m that they gave at this presentation that you are quoting from.

ISRG typically update current year guidance quarterly. Their next update can be expected at the next CC in early July. If past years are any guide, we can expect increased guidance at that time.

MTI

[Camden]

Donald,
You write "The device appears to be great for patients but not so profitable for hospitals." Then why are so many hospitals buy repeat buyers – coming back and purchasing a second, a third, even a fourth da Vinci?

[medsalesKLS]

Told you so - quit surfing and go talk to GYNs, their major focus for 2008. You will see they're not impressed with the results v. time and the hospitals -as poorly as they are run - are finally figuring out that the technology for this application does not reimburse any differently than a lap hyst, etc. Invest at your own risk. I do not own this stock, for good reason. However, a short position is looking better every day.