We can all acknowledge that ISRG is a great company. What we can't agree on is what it's worth. A 40 p/e on a medical device maker is more than triple the industry. See MDT,SYK,ZMH,SNN. We can expect another terrific earnings report--they seem to always beat. But the macro picture is clouded and international sales will probably soften. How much more priced to perfection can it get? Any hiccup or rumor can give it a quick 40.00 dollar haircut. With the New Year expect a major downdraft and a then a float up into earnings. All fluff until 1/3/12.
Thanks to folks like you, this thing may go down by $100 in a couple of trading sessions. But over the long term consider this:
If Mr. Market is willing to pay 68 for AMZN with all the competition it faces and net margin of 3.4, ISRG is a better buy with net margin at 27. As far rest of the medical devices industry, does ISRG really have any peer FDA approved robotic surgical devices makers to compare with? Is there really no difference between dentist chair manufacturing and ISRG's robots?
My best investment for many years!
Look, they haven't even begun to address all the possible surgical applications by a long shot, and they haven't even tried to address all the possible industrial applications.
I think that's a mistake in both instances.
There is nobody else in the ballpark, inexplicably.
>>A 40 p/e on a medical device maker is more than triple the industry
It doesn't matter one iota about the "industry average". Of those stocks that you just listed which has a monopoly?
Want to compare one monopoly to another? Try comparing ISRG to CSGP (Costar Group) which is basically the multiple listing service for commercial real estate. As a public company, CSGP has been around longer than ISRG and has historically maintained a high PE. CSGP's current PE is 114 - almost 3x higher than that of ISRG...
Not saying it couldn't drop ( or jump) by $40 but how many of the others in the industry have their growth rate, prospects and monopoly?
Industry averages, like book value are largely meaning less over the short term for a company like ISRG. Will they return to the mean? perhaps over 8 10 or 12 years, but there is little reason for that to happen over the next 1 to 2. If all goes well they will have a similar PE, only on a higher E this time next year.
When you consider the margins, revenue growth and earnings growth it looks like a heck of a deal. Show me anything else with the same growth prospective and no debt. If anything I fault them for not finding a good use for the $1 billion.