Is Intuitive Surgical a Buy, And Is It Time to Buy This Former High-Flying Growth Stock?

While the earnings yields of slow-growing medical device makers such as Stryker Corporation (NYSE:SYK) and Zimmer Holdings, Inc. (NYSE:ZMH) have expanded considerably beyond their five-year average (see below), Intuitive Surgical’s earnings yield has compressed to a roughly comparable valuation. The market has concluded that Intuitive Surgical is no longer a growth company as it has been priced more in line with slow-growing medical device makers. Given the case above, the market may be acting too harshly since the growth prospects for robotic surgery are likely greater than those of traditional medical devices.

Conclusions

As an investor, there appears to be good value in shares of Intuitive Surgical right now. Many times in the past few years, high-growth companies have seen their share prices pummeled only to rebound once the company returned to growth. While it is impossible to pick a bottom in the shares, investors who believe in the future of Intuitive Surgical could begin averaging into a position, perhaps buying half of their desired allocation now and the other half later whether the stock trades higher or lower.

The article Is It Time to Buy This Former High-Flying Growth Stock? originally appeared on Fool.com and is written by Brendan O’Boyle.

Brendan O’Boyle has a long position on Zimmer Holdings. The Motley Fool recommends Intuitive Surgical. The Motley Fool owns shares of Intuitive Surgical and Zimmer Holdings.

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