(By Salman - iStockAnalyst Writer)
Shares of Intuitive Surgical (NASDAQ: ISRG) have climbed steadily in past few sessions amid speculation it could be acquired by health-care giant Johnson and Johnson (NYSE: JNJ).
Talks of a potential acquisition surfaced after CNBC reported that the shares have rallied in the recent times as JNJ is interested in buying the robotic surgical systems company. CNBC reported on its blog site the non-story commenting that "The sharp rise has taken place amid persistent takeover rumors involving Johnson & Johnson.”Unusual activity in options of the company too has prompted many analysts to suggest that JNJ may acquire Intuitive Surgical.
The Sunnyvale, California based Intuitive Surgical manufactures robotic surgical systems, most notably the da Vinci Surgical System. The da Vinci Surgical System allows surgery to be performed remotely using robotic manipulators. A da Vinci Surgical System costs upwards of $1.5 Million dollars. For the past two years, use of the da Vinci has registered a stupendous growth of 150% year-over-year in the hysterectomy market. For the fourth quarter, the company reported a net profit of $50.8 million, or $1.27 a share, compared with a profit of $49.2 million, or $1.24 a share in the prior year quarter. Total revenue rose 22% to $231.5 million, falling short of analyst estimates of $252.4 million. Though hospitals are expected to cut back on expenditures in the event of a prolonged slump, the demand for robotic surgery should remain strong in 2009.
Pharmaceutical and healthcare sector has been abuzz with rumors of big takeovers after Pfizer (NYSE: PFE) announced its $68 billion acquisition of Wyeth (NYSE: WYE) in late January. Swiss pharma company, Roche Holding AG, which already owns a majority controlling stake in Genentech (NYSE: DNA), has been trying to acquire the remaining stake of the company. It is being contended that bigger and cash rich are on the lookout for probable deals. Experts point out that for pharmaceutical firms, this recession may very well herald an era of long-awaited industry consolidation.
According to Irving Levin Associates Inc, a healthcare research and publishing firm, in 2007, the sector witnessed a total of 523 M&A deals in segments like Biotechnology, e-Health, Medical Devices and Pharmaceuticals. However, in terms of dollars spent, the value of the deals in the health care technology segment in 2008 was $205.1 billion, up 17% from 2007.
Intuitive Surgical rose 31 cents or 0.2% to $108.16. Shares of the company have climbed over 15% in mid January.
Disclosure: Author does not own any of the stocks discussed here.
