Player Avatar VincentChua (52.61) Submitted: 7/20/2013 10:50:08 PM : Outperform Start Price: $393.33 ISRG Score: +10.60

Despite current litigation issues, docs are still using the Da Vinci system, customers are still loving it & figures still makes sense (at least for now). Below is an except from marketwatch article. "Second quarter of 2013 instruments and accessories revenue increased 18% to $265 million from $224 million in the second quarter of 2012. The growth in instruments and accessories revenue is the result of growth in da Vinci surgical procedures and increased utilization of new products. da Vinci surgical procedures grew approximately 18% in the second quarter of 2013 compared to the second quarter of 2012, driven primarily by growth in general surgery, U.S. gynecology and international urology procedures, partially offset by a decline in U.S. prostatectomy procedures." So I'm still bullish on their growth story & I'm strong feeling it'll beat the market & this dip may just prove to be a great buying opportunity in the long run.

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Member Avatar LWINNEN (< 20) Submitted: 7/25/2013 3:13:14 PM
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What are your thoughts on the below? I can't say I am not a little worried, at least for the short term.

UPDATE: Intuitive Surgical Slashes Sales View on Robot Concerns
6:43p ET July 18, 2013 (Dow Jones)
UPDATE: Intuitive Surgical Slashes Sales View on Robot Concerns

--Intuitive Surgical slashes 2013 sales outlook after disappointing second quarter
--Shares trade below 52-week low in after-hours trading
--Company says safety concerns, capacity constraints will pressure system sales

(Updated throughout with details and company comment.)

By Joseph Walker and John Kell

Intuitive Surgical Inc. (ISRG) slashed its forecast for sales growth this year as the company deals with increasing and concerns about its da Vinci surgical robot systems.
Shares of the Sunnyvale, Calif., traded below 52-week lows in after-hours trading as Intuitive Surgical disclosed a number of issues that have derailed growth in the use of its robots to perform hysterectomies, a primary catalyst for sales of the company's systems and surgical instruments.
Chief Executive Gary Guthart said a potential defect in the robot's surgical scissors, combined with negative press and resistance from health insurers in approving use of the device for hysterectomies, had led to a significant downtick in growth of the procedure for da Vinci. In May the company notified physicians that it would replace the scissors.
Procedure growth is integral to the company's sales strategy, because as hospitals increase the number of procedures they perform with the da Vinci, the more systems they need to buy.
"A change in da Vinci patient admissions can free capacity on existing systems and pressure new system sales," Mr. Guthart said. "This appears to be the case this quarter. Looking toward the second half of the year, we see increasing pressure on U.S. system sales."
The company cut its revenue guidance for 2013. It now sees sales growth in a range of 0% to 7%, down from its previous guidance range of 16% to 19%. The company expects procedures for the year to grow between 15% and 18%, down from its prior view of 20% to 23%.
In after-hours trading, Intuitive Surgical fell 12% to $371.95, poised to set a new year low when regular trading resumes Friday. The stock hasn't traded below $400 during the regular session since October 2011.
The company lowered its operating income view only slightly, saying it would reduce expenses to offset its lower sales. It now expects operating income in a range between 37% and 38% of revenue, down from a previous forecast of 38% to 39%.
Going into Thursday's conference call, expectations were that the company would give a detailed explanation for its disappointing second quarter, which it pre-announced last week.
Investors hoping for reassurances that the quarter was a temporary blip were disappointed, with Mr. Guthart disclosing a reprimand from the U.S. Food and Drug Administration over Intuitive Surgical's product-safety notification process. The warning letter could keep the company from having new products approved by the regulator.
He also suggested that Intuitive Surgical may have reached a ceiling on its new-system sales, with existing customers unable to add more of its robots because of capacity constraints. Some observers have warned of market saturation, but Mr. Guthart suggested the issue is temporary.
"We see an issue in the U.S. of existing customers looking at capacity," he said during a conference call with analysts. "They're not walking away from the technology, but it's more an issue of timing."
Despite the after-hours selloff, some analysts said they were pleased to see the company issue extremely conservative guidance. "Nobody's expecting them to be aggressive and they'll get the kudos when they actually over-deliver," said Spencer Nam, an analyst at Janney Montgomery Scott LLC.
Intuitive Surgical markets the machines to surgeons and hospitals as a means to help perform minimally invasive procedures with fewer errors and faster patient recovery. But the company has faced some criticism over the cost effectiveness and safety of da Vinci.
For the second quarter, the company's profit rose only 2.7%, primarily because of the lower system sales. Intuitive Surgical sold 143 da Vinci machines in the second quarter, down from 150 in the same period last year.
Overall, Intuitive Surgical posted a profit of $159.1 million, or $3.90 a share, up from $154.9 million, or $3.75 a share, in the like period a year earlier. Analysts surveyed by Thomson Reuters expected a profit of $4.04 a share.
Revenue climbed 7.8% to $578.5 million. Earlier this month, Intuitive Surgical projected revenue of $575 million, more than $50 million shy of Wall Street's expectations at the time.

Member Avatar VincentChua (52.61) Submitted: 7/30/2013 11:44:02 AM
Recs: 1


My take on such guidance is they're playing the defensive role & preparing the investors in event of sudden shock. It's like a kid telling his parents he won't do well but after exams he'll still pass with flying colours so he can beat the expectations he has set for his parents. Even if he doesn't and just meet expectations, at least he won't get a lecturing or be reprimanded for "poor performance". This is what's happening to ISRG in my opinion.

Another thing to take note from the article you posted, "It now sees sales growth in a range of 0% to 7%, down from its previous guidance range of 16% to 19%. The company expects procedures for the year to grow between 15% and 18%, down from its prior view of 20% to 23%."

When I see sales growth of 0%, as an investor, it's not a pretty sight. But It definitely beats a negative growth. This means that the company is still positive (in some way) of maintaining their sales in their current state despite such litigation constraints. It's like scoring a B+ despite it being a super challenging paper. I can imagine in normal economy, the company can do much better.

However, having said that, sales is very important to this company. If sales continue to slow and I see signs of decrease, I may be selling this stock. I've in my portfolio too. Small positions to learn more about this stock & this industry as well. So let's help one another in this journey! :)

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