Intuitive Surgical, Inc. (ISRG)

jmckearney (< 20) Submitted: 7/24/2008 10:30:57 PM : Start Price: $319.56 ISRG Score: +0.64

Intuitive surgical produces and markets the da Vinci robotic surgical system. This system allows the surgeon to perform as high or higher quality surgery with a laparoscopic, minimally invasive technique. This translates into less pain, fewer complications and higher patient satisfaction. Nearly all patients requiring prostatectomy (a procedure more necessary as more men reach baby boomer status) consider the da Vinci. The results are excellent, less incontinence, less impotence, less pain. Patients are traveling to centers with a da Vinci, which makes administrations and surgeons want to buy one for their facility. This equates to a million dollar purchase and $135,000 yearly sales per machine. The barrier to entry is enormous, however the widest moat comes from the lead in the race ISRG enjoys. Physicians like the data and outcomes and patients remember the catchy name at the coffee shop when they tell their friends about the robot. Risks include compression of the PE and profit margin as market saturation in the US inevitable occurs. I suspect the da Vinci will crossover into acceptance for more surgical specialities. Europe, Asia and other developed foreign markets are still strong growth opportunities.
Profit margin-24%
Return on Equity-20%
QTY revenue growth-64%
QTY Earnings Growth-88%
ISRG isn't a secret, but it isn't a flash in the pan tech stock either. Either this company will continue to produce outstanding results, or it will be acquired by a larger health care company for a high multiple. I'm following the moat.