Robotics Stocks to Buy: Intuitive Surgical (ISRG)
When it comes to medical robotics pure-plays, the 19-year-old Intuitive Surgical (ISRG) — which is streaking hard today — is about as established a player as you can get.
The company’s revolutionary da Vinci Surgical System used robotics to perform conventional laparoscopic surgeries with greater precision, resulting in less blood loss, faster recovery times and lower post-operative pain. Specifically, da Vinci uses a “targeted electrical charge to cut and cauterize a patient’s tissue during surgery.”
Its three-dimensional camera magnifies the site by a factor of 10, while the precise robotic arms — which offer a full 360-degree wrist motion — are ergonomically friendly for the surgeon and surgical team, reducing fatigue.
The wildly successful da Vinci system has fueled ISRG’s profits in recent years, but is often the case with innovative uses of medical technology, there have been headwinds. ISRG is facing 76 product liability lawsuits over adverse events, as well as shareholder suits, according to FierceMedicalDevices.com. The bad news dampened fourth-quarter U.S. sales by more than 20%; ISRG shares fell by 31% between June and December 2013.
That said, ISRG is up 30% since the beginning of this year on stronger performance outside the U.S. and higher levels of comfort with da Vinci among surgeons. But driving about half of that gain is today’s announcement that Intuitive Surgical got the FDA’s green light on its new da Vinci Xi system.
ISRG is considered expensive by several value metrics, including a price/earnings-to-growth ratio of well more than 3, but the expectations for growth are warranted. Intuitive Surgical’s place among top robotics healthcare stocks is all but cemented right now.