Author: tom Dragon
Date: 02-14-05 22:10
Five months ago, when I first mentioned at an investment club that we
would
invest in surgical robots, a senior in the group shook his head
and
muttered "pie in the sky."
Try "stock in the sky," instead.
When Intuitive Surgical (Nasdaq: ISRG), the world's leading
manufacturer
of surgical robots, announced fourth-quarter results this past
Wednesday,
the stock soared 15% in a single session.
The shares are now up over 96% in five months. The S&P 500 is up 7%
over
the same period.
What's all the fuss about you ask?
Let's start with revenues and earnings. Sales for the fourth quarter
jumped 64%. (Recurring revenue was up 79%.) Gross margins nearly
doubled
to 65.9%. And the company's net income of $11.7 million flew by most
analysts' estimates.
Robotic surgery sounds like science fiction. But it's not:) It's being
performed every day at hundreds of hospitals in the U.S. and around the
world.
The benefits are numerous: reduced trauma to the body, less anesthesia,
less blood loss, less post-operative pain, less risk of infection,
shorter
hospital stays, less scarring and faster recovery.
But surgical robots don't come cheap. Fully equipped, they cost $1.3
million each! but worth the money.
That's good news, of course, for shareholders of Intuitive Surgical.
Especially since the company has no competition.
That's right. It holds a monopoly position in surgical robots.
The da Vinci is actually a descendant of a robot created for the
Department of Defense in the 1980s that would allow surgeons to operate
on wounded soldiers on the battlefield from a safe distance... or even
perform emergency surgery on astronauts.
The current da Vinci system, however, is a bit more pedestrian.
When using the system, a doctor sits several feet away from the patient
and remotely manipulates robotic arms to do the work.
Essentially, the surgeon sits at a console, looking into a
three-dimensional magnified viewfinder. He performs the surgery by
looping
his fingers around controls on the console. These movements are
translated
to the robot "hands" inserted into the ports. The robot hands follow
every
move of the surgeon to do the necessary procedure.
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