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  • ISRG - HYPERpriced- $350 Price Target. 0 comments
    Sep 4, 2014 7:26 PM | about stocks: ISRG

    ISRG is the most hyped stock in its sector. Naive investors beleive that the turnaround story has begun and that the Da Vinci XI will save the company and will bring the company back to double digit top line growth as early as next year.

    REALLY???

    ISRG is not an easy fix story!!! ISRG is NOT the same as NFLX!! You are talking about a Surgical Robot that can cause permanent damage to your health.

    Intuitive is known to release every kind of BS news just to improve their "reputation"... sort of. After having a rough 2013, flooded with lawsuits and hidden problems

    Look at today's press release from ISRG:

    -----------------------------------------------------------------------------

    TEN FOLD GROWTH in Surgeons Trained in Minimally Invasive da Vinci COlorectal Surgery

    SUNNYVALE, Calif., Sept. 4, 2014 (GLOBE NEWSWIRE) -- A record number of U.S. colorectal surgeons received hands-on training using the da Vinci Surgical System at the fourth-annual Colorectal Fellowship Training Program, sponsored by Intuitive Surgical (Nasdaq:ISRG). Intuitive Surgical hosted 88 residents this year, up from nine when the program was first offered in 2011. - See more at: globenewswire.com/news-release/2014/09/0...

    -----------------------------------------------------------------------------

    ALL I CAN SAY IS:

    REALLY?? 88 RESIDENTS....Doesn't sound too impressive to me, especially when the company is trying to release these news with a headline "ten-fold".

    Bad PR is biting Intuitive Surgical's butt and it will take 3-5 years to improve the public sentiment.

    Let me ask you: If you or your loved one has to undergo hysterectomy surgery, would you use internet to find some information about the surgery options? I BET YOU WOULD. Guess what you will find: SCARY facts and lawsuits about the robotic surgery. MY GUESS is you will panic and the chances are you might prefer the traditional surgery vs robotic one.

    NOW LET'S TALK ABOUT THE STOCK PERFORMANCE

    On July 22. 2014, ISRG reported its Q2:

    EPS was $3.73 vs $2.83est (buybacks helped)

    Revenues of $512m vs $502 est.

    Next day the stock was trading at $460-$470 level, up from $392, which is about 17-19% move to upside.

    BUT WAIT!!! The REVENUE was down 11% vs year ago.

    LAST YEAR: on July 19, 2013 the stock plummeted to $390 after ISRG missed the expectations and lowered the guidance.

    THIS YEAR: on July 22, 2014 the stock is trading at $460 ish after they reported much worse numbers that last year when it traded at $390 after the results.

    So,the BIG FAT question is WHY its trading higher now by $70 when the results are even worse than last year???

    The answer is: Da Vinci XI - Hopes that this new device will bring the growth back as early as next year and will be "happy ever after" for Intuitive Surgical - CANNOT BE FURTHER FROM THE TRUTH!!

    Why? Simply because hospitals are not in rush to spend $2million for a new device when the patients aren't too excited about the safety issues, negative press and higher cost (some insurance companies will not cover 100%).

    PAYING $70 per share more than last year when the revenues were down by 11% vs year ago quarter just based on rosy expectations of "Xi" is not a compelling investment idea in my book. It's just there are too many problems within the company (the sales tactics, the misinforming marketing materials, negative sentiment and etc..) - to deserve such a valuation such as 35 times trailing PE.

    The fair value of this stock is $350 MAX. - If the company delivers $18-$20 EPS and 12% growth for the next year (2015), which can be challenging, considering the uncertainty with the geopolitical situation in Europe. At $350 the stock will trade at a reasonable 17-19 forward PE. This stock should NOT trade more than 20 times forward earnings with projected 12% growth and so many uncertainties ahead.

    CAREFUL INVESTING TO EVERYONE!! BE SMART ABOUT YOUR MONEY!

    Themes: ISRG, Da Vinci, Intuitive Surgical Stocks: ISRG
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