Intuitive Surgical, Inc. (ISRG) Earnings: Down on da Vinci

Looking ahead
Clearly, the environment that Intuitive Surgical faces today is quite different from what it has encountered over the past few years as it grew rapidly. A company that grew revenue at a 25% annual rate over the past five years is now projecting possibly flat growth?

The reality is that Intuitive Surgical (NASDAQ:ISRG) isn’t a growth stock any longer — at least not for now. As such, it doesn’t deserve growth stock price-to-earnings multiples. That’s why shares have plummeted so much.

Management doesn’t expect the situation to improve significantly this year. Unless something changes, though, shares aren’t likely to move back up to any major extent.

Having said that, this is still a good company in my view. I think the value of its products will win out over the long run. Intuitive certainly has some public relations issues to address with the da Vinci systems, but I think that it will overcome those hurdles. The FDA issues will be resolved. Life will go on.

After the latest sell-off, shares are trading well below even the lowest price target of 13 different analysts polled by Thomson/First Call. Analysts can be wrong — and often are. I don’t think they’re all misjudging Intuitive, though. My view is that Intuitive Surgical (NASDAQ:ISRG) will find its way again, but I’m not sure how long it will take to do so.

The article Intuitive Surgical Earnings: Down on da Vinci originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Intuitive Surgical.

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