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Mazor Robotics: Market Leader Breaking Out

Mar. 06, 2018 2:14 PM ETMedtronic plc (MDT)63 Comments
Taylor Dart profile picture
Taylor Dart


  • Mazor Robotics has spent the past four months in a basing pattern between $50.00 and $69.00 after a parabolic move for the first three quarters of 2017.
  • The company has seen triple-digit sales growth for two of the past four quarters, with the other quarters showing sales growth of 36% and 84%.
  • The company has developed innovative devices to aid in spinal and brain surgeries through its products Mazor-X and Renaissance.
  • The technology aims to make spinal surgeries and brain surgeries more precise as Mazor's technology helps to guide the surgeon during operations.

Research has shown us that some of the largest winning stocks of the past century have been companies that have been public for less than 10 years. Based on this, I am always monitoring new IPOs over the past 5-10 years as some of these stocks are extremely innovative, are under the radar, and have the potential to deliver superior returns compared to some of the largest cap names which have already seen 1000%+ returns off their lows. Mazor Robotics (NASDAQ:MZOR) is one the companies that fits this bill, as it went public less than 5 years ago and is clearly an innovator. The company develops surgical guidance systems to aid in both spinal and brain surgeries to make these operations more precise, less invasive, which in turn makes the surgeries less painful and risky. After a monumental run in 2017, the stock has spent the less four months basing and is beginning to emerge out of the top of this basing pattern. I have entered a new long position in the stock at $65.70 based on the company's strong technicals and improving fundamentals.

(Source: Mazor Robotics Website)

(Source: Mazor Robotics Website)

There seems to be a common misconception that investors and traders should buy stocks that are on sale during corrections, but I do not completely agree with this concept. When the market begins to correct from its highs and sees a nice sized pullback of 10-15%, I want to be looking for stocks that have corrected the least, and ideally less than two times the amount of the market. This may seem silly as I am getting a more expensive stock, but I would much rather own an expensive stock than a cheap one. Expensive stocks are expensive things tend to get more expensive as they are under demand. Assets that are cheaper tend to get

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Taylor Dart profile picture
"A bull market is when you check your stocks every day to see how much they went up. A bear market is when you don't bother to look anymore."- John Hammerslough You can access more in-depth research, my current portfolios, my top-12 miner rankings, GDX buy/sell signals, new positions I am entering/exiting, plus proprietary sentiment indicators updated weekly for gold miners in my newsletter below. Returns Link: https://imgur.com/a/db1znYSSubscription LinksMonthly: https://buy.stripe.com/7sI14d4b92vFdUc15cAnnual: https://buy.stripe.com/4gw28h0YXeen7vObJP - Disclosure: I am not a financial advisor. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading or investing.

Analyst’s Disclosure: I am/we are long MZOR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (63)

Interesting article,gonna try your game and picked up 25 shares to test your theory,thanks
N3utra profile picture
Nothing, just current market climate and timing more than anything. Coming into 2018, MZOR was hot just like everything else, and it tumbled in February, along with everything else. Mid February, when the tumble seemed to bottom out, they reported, beat, and proclaimed what's been discussed here in this thread.

Stock didn't really move much as a market recovery was in progress, but once things seemed "clear" in early March, it took off (as did other companies/sectors). Like, way off. Everyone here was expecting something close to $70 because of management's commentary and 2018 "transitional" outlook (also assuming the market stabilized and we went back to a 2017 type investing environment). When it surprised, crossed $70 and just kept going, there was some massive profit taking, and rightfully so with all the volatility up until then. Around that same time, we got the tariff news, so it rode that momentum down below its 50 DMA and a resistance around $64.

It finally consolidated around the $60 mark, which was still below its 50 DMA, but had nowhere to really go without any substantial news and/or overall market sentiment increasing. As April dragged on, earnings started up and the tariff issue still lingered. Financials started reporting and it wasn't as great as everyone wanted. Mr. Market wasn't sure if we were really going to have a proper recovery, especially with a potential trade war lingering, so sentiment stayed muted and dropped more.

MZOR isn't a sexy name like Amazon or Netflix, so any sector wide downturn will bring it down and once something starts breaking certain price points, it just goes until it finds a bottom. So down it went, and there is no news to speak of, or heavy trading volume, that could have stopped it along the way. It's finally found some legs again at this $54 level and it hasn't broken its 200 DMA, which is really good or else this would be a completely different conversation.

As each month ends, investors try and time their profit taking to maximize their results for that month. MZOR closed almost neutral and it's now risen and closed up 6/8 days in May. Earnings are all coming in strong and market sentiment is stabilizing and rising up slowly. China tariffs are neutral, but moving forward with some minor, positive sentiment. The Iran deal news is being digested and a company like Apple, that has so much influence on tech and market sentiment, crushed and surprised and is hitting a new market cap. For the sake of investor psychology, that's a great thing.

I like MZOR a lot and there is nothing they're doing that warrants them being oversold down below $60 and into mid-October 2017 levels. I think $60 is a fair value for the stock to build off of, and as such added to my position today at the open because I think it's stabilized and going to move positively as their EC is on Monday. Trading volume looks good and rising slightly. Short volume in April is at normal, average levels seen on a yearly basis. It's not high by any means, but not significantly lower than normal.

I've charted MZOR and published it over on Trading View. It's approaching a resistance level at $56, which I'm just now realizing it hit after hours, HA. It feels like people are waking back up to it again, so I see us being back in the $56-60 range soon (which is where it should be any ways to begin with, minus news and market sentiment). If the EC is great, and I'm not going to pretend that I know if it will or won't, I think you'll see a price jump up towards $62 and possibly hitting that nice $64 level again and hanging out there for a while. It'll be back above its 50 DMA and "stable" once again so that it can grow back towards the $70 range the rest of the year.

If you like to speculate some along with standard analysis, there was a great little news blurb on MZOR published today showing that it really is as amazing as the industry and others here have said: http://bit.ly/2rzXJzs
So I read all this and it’s down down like a clown in downtown ! what’s wrong with this stock now ?
Taylor Dart profile picture
50-day moving average is at around $63.70. I don't like to see stocks close below 50 DMA as it shows a sign of weakness.
It will be v. interesting to see the price action today. The stock has opened lower for almost a week straight after hitting new highs. I'm personally waiting for a better entry point.
Taylor Dart profile picture
For full transparency I sold 1/4 of MZOR at $75.70, and out of the rest at $67.90 Friday for a 15% gain on first 1/4, and 3.5% gain on last 1/4, and 6%+ gain across full position.

Not gonna let a 15% winner turn into a loser in a choppy market. Will revisit.

Stock is going to want to find support here near its 50 DMA.
AgileDave profile picture
Taking partial profits is like changing an answer on a multiple choice test. Sometimes it works but test people tell us our first instinct is more often correct. Selling 1/4 indicates your instinct was it was time to get out. In this case your instinct was right. Easy enough to buy it back if it turns back up. Trades are cheap.
Taylor Dart profile picture
Hi Dave,

I would agree, in this case these were purely mechanical sells that triggered and involved absolutely no discretion. Was lucky I got my rules to kick in on this one as most stocks arent gaining much traction.

I also sold a huge slice of shares recently. I was pretty transparent about $70/share Q3 target so when that triggered in Q1 it was a foregone conclusion to lock in my long-term capital gains. That said, short-term capital gains are usually for suckers.

I'm cash heavy right now, but also being completely screwed over by one of my brokers (starting with the letter F). They randomly "lost" 56,000 dollars on me. Has anyone ever heard of this happening? I have statements but I'm not sure how to get it resolved if they fight it.
Thanks for the enlightening write up Taylor. I was in at $60 and holding long, hoping for another Intuitive which I sold at $355. Mistake because it eventually rocketed past $800 and split. My wife was smart enough to hold onto her shares.
Great article Taylor! However, maybe we could actually discuss MZOR and this unreal breakout that has just occurred?
Taylor Dart profile picture
Hi Paul,

Great breakout, looking alright thus far. Trend up, stops in, enjoy the ride.
Thanks for the article Taylor, always enjoy your thorough canslim analysis.

Debating stops and market/security tops with online "traders" is akin to swimming upstream in a raging river. A waste of valuable energy and time.
AgileDave profile picture
Debating is only a waste of time for those with their mind made up.
Placing a stop loss on any security is very prudent in current environment and the stock price could move down for many more reasons outside of Company fundamentals ie planned insider sales algos Common market drop or Novice investors that get scared 😱 and sell their shares too quickly!!!
CommonSense_ profile picture
I really don't understand the stop loss thing. It seems stupid to me. If you think the shares are undervalued, you buy. If the shares go down, they become even more undervalued, and you should buy more. If you sell the shares because they go down, it means you have no idea what they are worth and you should never have bought them in the first place.
Taylor Dart profile picture
I don't care what the shares are "worth", I care about making money. There are hundreds of stocks per year that will go up 30 - 50% per year and significantly out-perform the market. I have zero interest in holding a stock that is down 10% and allowing it go down 30-50% or more. I have enough confidence in my system that I can make back that money and find another stock to return significantly more in that period vs. sitting with dead money and a loss. Ed Seykota said it best "Those that are not willing to take a small loss, will eventually take the mother of all losses".

I think it's alarming that you think cutting losses is stupid, and I think if you don't educate yourself between now and the next secular bear market, you'll likely get wiped out or see draw-downs of 50-70% in your portfolio, something most can't weather. There are some that are very experienced that have done this for decades that are able to, the fact is, most are unable to. As Tyson used to say "Everybody has a plan, until they get hit".

80% of stocks go down 50% or more during a bear market, a good chunk go to zero. Even if you know what you own, it's not easy to stomach looking at a portfolio down 75% from its peak.

Investors that bought the peak in the Nasdaq in 2000 didn't see their money return to its watermark for over 15 years, and this is assuming they were indexing, many individual stocks were cleaned out. The "stupid" people that used stops picked up the scraps after a 60% decline and a 90% decline in many stocks and benefited from the next bull market.
The Black Baron profile picture
Commonsense, don't confuse investing with speculating.

The investor wants the price to go down so he can buy more, he wants to own as much of the asset as possible and hold it. The speculator wants the price to go up, meaning he is correct in his speculation and should thus increase his line in the asset. The speculator sells an asset that moves against him, quickly, allowing him to retain the most capital for his next bet. Any trader worth his salt proceeds in this way.

See the difference? Stop losses make perfect sense.
Finally hearing from other investor's, I have been purchasing shares of Mazor as early as 10 dollars a share. This stock has been the top performer in my portfolio. I guess what bothers me is, that no one speaks to market share when addressing Mazor. Or the fact that they are 1st to market. So, to say that this stock is at a top is so short sided. The benefits of Mazor robotics is completely unknown, they are just beginning to show the impact of the X system on the medical community. When I 1st invested there was just the Renaissance system, which is more of a singular solution, the X system brought a much more broad application with far reaching growth opportunities. The medical industry barrier's to entry are still there. Mazor is finally knocking down those barriers. To say this is a top? is short sided to say the least. Just sayin...
The reasons to invest in Mazor are:
- cross selling with Medtronic product line. See recent quarterly transcript, this is going REALLY well!
- difficult type of surgery
- Other areas of Robotics, such as those handled by DaVinci, are going to soon be threatened by tools like University of Michigan's FlexDex and Medorobotics Flex Robotics product.
- Huge first mover advantage, which in healthcare cannot be understated in importance
I am amazed you have been criticised for using stops!!! What was the criticism?! This is a very compelling suggestion, though!
Taylor Dart profile picture
I've heard it all.

- Stops are stupid if you believe in a company
- Stops show the other banks your "hand"
- Stops serve no purpose other than if you feel like giving away your shares at a loss
- Stops only make sense if the story changes

a) Great companies have dropped 70-80% after they finally topped and took years to recover this amount.

b) I'm well aware of this. The point of my stop is that if banks and funds are really in this stock, they should be supporting it above where I purposely place my stop at a level that I believe the trend is weakened. If they are not accumulating where I expect them to, I want out.

c) Small losses are a good thing, especially if your system can still make money at a 35% win rate, and excels at a 60% win rate. My strategy is profitable because I'm willing to take small losses and not tie up capital.

d) Often the technicals weakening is the first sign of the story changing as I believe technical weakness often shows up in the charts before fundamental weakness in many cases.

At end of day, stops are there for protection. Many instances where I've been stopped out prematurely and I simply buy the stock back, nothing wrong with getting shaken out and jumping back in on an adjacent setup.
AgileDave profile picture
People who are always right don't need stops. There are way more perfect pickers on the internet than in real life.
Taylor, why not write put options instead? Essentially, the argument in favor of this approach vs. trailing stop loss order is that, if you believe the market is fat tailed and has no secondary moment, then options offer you the best way to accomplish everything you just stated. The profit on the sale of those contracts can in turn cover your selling costs, thus reducing your transaction costs while also allowing you to set a fixed price. Further, you can mix in XIV collared calls to price in systemic volatility.
I bought in at $40. Not a day goes by when I don’t think this company’s stock is going to be the number one performer in my basket over the next 5-10 years, however volatile it may be... like today, when Gary Cohn quits his post as Trumps leading economic adviser and the market seems to get spooked after hours, costing MZOR 5 % points on the day. Ho-hum, I’m still gonna SWAN tonight :)
N3utra profile picture
Great article. I'll echo what was said that management had said this was a transitional year, so growth would be limited. I'm in it for stability, consistency and leadership this year. A great play for the hi-tech medical field.

The partnership with Medtronic is fantastic and they have an incredible product with the X. Looking forward to hearing more news from them and wouldn't be surprised if they popped. The technicals I've drawn show some strong potential as you've pointed out.
artiest profile picture
I like the stock, the partnership with Medtronic is a key step in the acceleration of robotics in the spine market. I follow also GMED (globus) because these 2 will make the B$ dollar market at term.
Thanks Taylor,just took a look at MZOR looks interesting, stock is sitting at 66.50 about 7% above pivot point if it pulls back 4% or so I might have to nibble,As always I enjoy your articles.
Buyandhold 2012 profile picture
I like Mazor Robotics' strategic partnership with Medtronic.

But it is not my type of stock. Too risky and too volatile for my taste.

But my 23 year old son might like it. He convinced his grandmother to buy him 100 shares of Nektar at 13 in January of 2017. Last I checked Nektar was at 98.

Perhaps Mazor Robotics has the potential to become another Intuitive Surgical.

But I will sit on the sidelines for now.

My focus right now is on Sherwin Williams.
NKTR was/is a great buy, sorry I missed it last year.
Wow, how did I miss out on NKTR? Thanks for bringing this up. Need to put my research hat on and see if there is still upside here.
06 Mar. 2018
looks like an inverse head and shoulders to me
Great company been in it for a while now. I see it as more of a long term play, but always a chance of medtronic buying them out or short term momentum. Management said this is more of a consolidation year, so not expecting a big increase in overall sales growth short term. Revenue from existing systems continues to grow and they made profit for first time last quarter.
Jack_Global profile picture
Buy more at the very Top. So smart.
Taylor Dart profile picture
You see a top, I see a potential breakout. If I'm wrong I have a stop. Top-calling never made anyone any $ long-term.

You've been bullish OPK since September 50% higher, I'm glad you see this as a top, prob has a better chance of working if you're bearish.
You would miss almost any growth stock with thinking like that.. if this stock is a multibagger does it matter if you get it at 55 or 66... you would miss the whole ride waiting for 55 again
PM's Rock profile picture
Yeah right. I used to think that too. Usually ends with holding losers. Nice write up Taylor. Much appreciated.
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