Intuitive Surgical ($ISRG) is minding its knitting. It's trying to make good on its launch in general surgery last spring, while expanding international sales. After selling off into the launch, investors bought back into the story late last year. But shares still haven't made it back to prelaunch highs of more than $540 per share.
The minimally invasive robotic surgery company still sees its shares as a bargain. It's launched a $1 billion share repurchase program. Unlike some of its medical device peers in recent years, acquisitions don't figure prominently into its growth strategy. That makes buybacks an obvious use of its cash stockpile.
The company had $2.5 billion in cash at the end of 2014. It bought back $1 billion in shares last year, buying 2.5 million shares at an average purchase price of $398 per share. Now Intuitive Surgical's share price is close to $500--and it still sees that as a relatively good deal. Leerink Partners analyst Richard Newitter agrees that the stock still has legs, dubbing it one of his top picks.
|The da Vinci Xi patient-side cart--Courtesy of Intuitive Surgical|
The company launched the da Vinci Xi system in general surgery in the U.S. last April. It hopes that expanded use of the system there, as well as international launches will keep the momentum going.
"We anticipate growing our organization in specific areas through 2015 with particular emphasis on Asia, Europe and in operations. Looking to 2015, our priorities are as follows. First, we will focus on the expanded use of da Vinci in general surgery particularly colorectal surgery and hernia repair," said Intuitive President and CEO Gary Guthart on the most recent earnings call.
He continued, "Second, we'll work to complete our launch and new product introduction of da Vinci Xi in key markets globally. Third, we will develop our organizational capabilities and markets in Europe and Asia. And finally, we plan to build Xi compatible da Vinci Sp prototypes and initiate customer valuations."
The da Vinci Sp is a single-incision offering; FDA cleared it last year for urologic surgical procedures. It's compatible with the Xi system.
Intuitive Surgical was up 1% in early trading on the buyback announcement. Prior to that, it was off almost 7% for the year so far.
- here is the release
Special Report: Top 10 med tech market movers in 2014 - Intuitive Surgical