A Wedbush analyst said Thursday that shares of Intuitive Surgical have taken too big of a hit in recent months, and said recent reports of a problem with its da Vinci surgical system shouldn't hurt the stock further.
THE OPINION: Intuitive disclosed a couple of instances of "stalling" problems affecting the robotic surgical system in November, and the Food and Drug Administration posted the disclosure to its website this week. Wedbush analyst Tao Levy said the problem, which has been reported three times, doesn't affect new da Vinci systems and hasn't hurt sales of new systems.
Levy said the Sunnyvale, Calif., company has recently disclosed a few rare problems with older da Vinci systems. In his opinion, Intuitive Surgical is being very cautious because it received a warning letter from the FDA earlier this year.
He maintained an "Outperform" rating on the stock with a price target of $514 per share.
The da Vinci system uses robotic arms, cameras and a remote-control console to help doctors perform surgery with tiny incisions. It is used in gynecological procedures, heart surgeries, prostatectomies, urology procedures, and other operations.
Intuitive Surgical Inc. said in November that the "instrument arm" on the system might experience excessive friction. The company said surgeons using the system may feel resistance, and if they continue to push through that resistance, the device could stall and then "suddenly catch-up" to the correct position. That might cause an imprecise surgical cut.
The company said in July that reduced hospital admissions and conservative management choices by insurers were hurting its business. Later the same month Intuitive received a warning letter from the FDA after an inspection. Some experts are also questioning the use of da Vinci systems in routine hysterectomy procedures, saying the procedures are more expensive but don't improve outcomes for patients.
THE STOCK: Intuitive Surgical shares fell $3.29 to $367.39 in afternoon trading. The stock is down about 26 percent since July 8. In February the stock traded as high as $585.67.