We know the problems ISRG is having and based upon the performance of that stock and Novadaq's stock we seem to be tied together. So the $64 question is will our 1st quarter results and what Arun prognosticates at the upcoming CC be along the same lines as Intuitive? I have to admit I am worried about 1st quarter revenues and here is why. This past January or February we preannounced our revenues for the 4th quarter and they were very good comparatively. Now along comes the 1st quarter and Intuitive preannounces very down numbers that not only drives down their stock but ours as well. What concerns me is why didn't we preannounce 1st quarter since we had established the precedent earlier in the year. Is it because the revenue numbers comparatively are not attractive? Any other thoughts would be appreciated.
Endo, this is a very obtuse earnings quarter. If, and this is the biggest issue I see for this quarter, if Obamacare had "frozen" hospital capital spending then Novadaq will be hurt and hurt bad. If the ratio of "sales" to "rents" diminishes or even stays the same, the 1st quarter will be hurt. The two are linked. The real marketing impact is not "scheduled" to hit until the end of the second, and into the 3rd quarter. Arun has stated first that "six months or more" will be required to train and bring up to speed his new hired marketing members. Later and most recent I heard "nine months"...used in his discussions. I didn't hear any "horrible" drop off from GE's medical division, but that may not be an effective canary in the coal mine. ISRG also has its issues that have removed it from being an effective canary: Introduction of a whole new surgical machine and new instruments and abilities muddying the purchasing decisions of hospitals, the endless drip, drip, drip of the news media and law suite, the ACA, and in general deeper penetration into the adoption curve natural growth deceleration.
I too am puzzled. Here are my estimates.
1) 10-20% Very disappointing earnings, and ISRG correlation is very strong and continues.
($10.1 Million revenue, $(-0.09) EPS, 39% YOY revenue growth)
Price drops to $14-16 range
2) 20-80% A mixture of the theoretical adoption curve and the impact of exogenous forces.
($11.5 Million revenue, $(-0.07) EPS, 58% YOY revenue growth)
Price rebounds to $16-$20 range
3) 80%-100% My theoretical model for adoption, all the exogenous influences are minor
($12.8 Million revenue, $(-0.04) EPS, 76% YOY revenue growth).
Price returns to previous high and grows ~50% on an annual basis $20-$24 plus
These may be high, but they are the best I can muster...unbiased?
The interesting thing about your "disappointing" estimate of $10.1M is that it is right in line with analyst estimates of $10.3M, which is consistent with the company's 40% revenue growth target for 2014 - Q1 of 2013 revenue was $7.3M. No doubt there could be some seasonality in the placement/sales number for equipment, as Q4 is traditionally the strongest month for hospital equipment sales, but if they do less than Q4 2013's revenue of $10.7M, that will be the first time in over a couple of years without quarterly sequential growth. I think there is enough momentum in the recurring/kit sales to keep the sequential revenue growth train going, so I like your $11.5M revenue number. What the share price does with that number, who knows - we are at a very fickle time for the market, in general, and biotech even more - a lot of low volume, high volatility days?