Next Tuesday, MAKO Surgical will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.
Until recently, MAKO Surgical's success with its RIO robotic surgery system for orthopedic procedures seemed almost assured, as the company was on the cutting edge of a promising new industry. Lately, though, troubling questions have arisen that could hurt MAKO's prospects going forward. Let's take an early look at what's been happening with MAKO Surgical over the past quarter and what we're likely to see in its report.
Stats on MAKO Surgical
Analyst EPS Estimate
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Will MAKO Surgical's earnings ever fully recover?
In recent months, analysts have gotten slightly less optimistic about MAKO's earnings prospects, widening their loss estimates by $0.03 per share for the first quarter and double that for the full 2013 year. But the stock has languished under more dramatic losses, with the stock falling nearly 15% since late January.
A combination of factors has hit MAKO hard this year. The implementation of Obamacare's medical device excise tax will force the unprofitable company to pay 2.3% of its gross sales. Moreover, weaker-than-expected sales of its RIO systems in 2012 led the company to miss earnings projections, and the guidance it gave in February for 2013 sales was uninspiring.
MAKO also had to deal with legal issues during the quarter. It filed suit against competitor Blue Belt Technologies over alleged violations of a non-competition agreement with a former sales manager who went to work for Blue Belt. Meanwhile, after filing suit against Stanmore Implants earlier in the quarter, MAKO settled last month, agreeing to buy Stanmore's robotic assets and removing a potential competitive threat.
Arguably, though, the worst news for MAKO came from competitor Intuitive Surgical , which faces controversy over its da Vinci surgical system. The FDA recently announced it would investigate Intuitive's device in light of lawsuits filed by patients alleging injuries and deaths as well as comments from medical experts that the devices add expense without corresponding medical benefits. Although the two companies don't overlap as much as you might think in terms of medical procedures, MAKO is likely to suffer from any fallout from Intuitive's problems.
In MAKO's earnings report, watch for more detail on how the company plans to make use of its new Stanmore assets to bolster its business. Intuitive Surgical's problems could be an opportunity for MAKO to stand out from its better-known peer and demonstrate a competitive advantage.
The big question facing investors right now comes down to this: sitting near all-time lows, has MAKO Surgical's robotic surgery growth story rusted over? To answer this question, Fool.com analyst and MAKO expert David Meier has authored a premium research report covering all of the must-know details on the company, including key areas to watch and risks looming in the future for the medical robotics company. Claim your copy by clicking here now.
Click here to add MAKO Surgical to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.
The article Will MAKO Surgical Ever Fully Recover? originally appeared on Fool.com.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Intuitive Surgical and MAKO Surgical. The Motley Fool owns shares of Intuitive Surgical. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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