A Buying Opportunity for a 3-Year Triple


Intuitive Surgical (NAS: ISRG) beat analysts' expectations. Again. It raised 2012 revenue guidance to growth of 20% to 23% over 2011 compared with last quarter, when it expected to see growth of 19% to 21%.

Yet shares were knocked down more than 8%. Investors seem to be concerned about weak sales in Europe and a decline in prostatectomies in the United States.

I don't think they've been paying attention.

Prostatectomies in the U.S. haven't been a growth story for a while; most of the growth was from increasing use of the procedure in Europe. Hysterectomies have become the new rocket ship to grow revenue, and the company has been supporting surgeons' development of other da Vinci surgeries through the development of new accessories for its robotic-surgery machines. Growth of hysterectomies will eventually plateau, just like prostatectomies, and the company is smartly planning for another procedure to come in behind.

Even with the decline in U.S. prostatectomies, procedures grew approximately 26% year over year in the second quarter. That's nothing to sneeze at.

The weakness in Europe is certainly troubling, but it's not all that surprising. Governments in crisis having trouble paying for medical procedures and million-dollar machines? Shocker. MAKO Surgical (NAS: MAKO) didn't sell any of its surgical machines in Europe in the second quarter. Investors in Boston Scientific (NYS: BSX) and Medtronic (NYS: MDT) should take note, especially for the surgical areas that might be a little more discretionary.

But unless you think the world is going to end, Intuitive Surgical's long-term trajectory isn't really affected by these macro issues. The company had the same sort of issue during the U.S. recession in 2009, when sales of da Vinci machines declined year over year. The stock has more than tripled since then.

ISRG Chart
ISRG Chart

ISRG data by YCharts

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The article A Buying Opportunity for a 3-Year Triple originally appeared on Fool.com.

Fool contributorBrian Orelliholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Medtronic, MAKO Surgical, and Intuitive Surgical.Motley Fool newsletter serviceshave recommended buying shares of Intuitive Surgical and MAKO Surgical. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.

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