Private requests overwhelm my email inbox to comment on the BARRON's article re Intuitive Surgical/ISRG. (Well, okay, a whopping two requests.)
I have never figured out why BARRON's does its typical hatchet jobs, which they view as investigative journalism, especially re growth stocks. But it does, so I use articles such as this one as a mechanism to buy on
short term price weakness investment opportunities I favor long term.
That said, the article is about as even-handed as BARRON's has published, without being mealy-mouthed. The author is fair, and considers what is known, and then predicts (negative) change in those factors. That is an approach I do not favor. If valuable, then where are the BARRON's articles that clamor in favor of the company and stock, especially over the past 3-4 years? BARRON's is renowned for its negativity, not for the quality of its insights.
Some specific items...
1) "
Patients have less bleeding and scarring, and can get back on their feet without a long, expensive hospital stay." Really, what is the value of this truth? The demand cycle for the
da Vinci comes right now from medical suppliers (hospitals, doctor groups, etc) -- what happens when prospective patients learn of the
da Vinci, and seek doctors who offer that option? If you are a supplier, you had better buy it now to stay ahead of the cycle, or lose patients to competitors.
2) "
The volatile stock has fallen as much (~25%) twice this year already, as it changes among momentum investors' fickle hands." Oh, brother, yet another person for whom chart patterns leave him (or her) gasping for oxygen. So frightening the 25% share price decline (~$350 to $250), but which is akin to a $35 stock declining to $25. Guess what, a decline of this magnitude occurs all the time. Place the decline within context, however, and you might arrive at a meaningful notion: that the decline could continue even lower.
Such is not the case with
Intuitive Surgical/ISRG. Although still mired in its base, it
is a base; in fact a
high level consolidation, to be precise. (Check this blog's archives, if you have interest in understanding this particular pattern.) I believe
Intuitive Surgical/ISRG lies somewhere between Points B and C of its
S Curve, and even when it hits the back end of the curve, who is to say it will not grow to E rather than fall toward D, as the author speculates? New products, new management, even new technologies put the damper on this possibility; of course, most companies fail at Point C, and enter the decline phase. During the transition, though, a stock still could rise to new all time highs and higher valuations, even while the rate of growth slows.
It's all in the chart, sorry to say; something most investors miss, Bill Alpert included. The two $100 declines were buying opportunities, as I discussed then. The shelf life for this BARRON's article expires when the stock closes above $320. And when it closes above $360...
