Bloom Could Come Off Intuitive Surgical's (ISRG) Rose as Lawsuits Fly - Citron
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Price: $479.42 -0.95%
Rating Summary:
18 Buy, 3 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 20 | Down: 41 | New: 13
Rating Summary:
18 Buy, 3 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 20 | Down: 41 | New: 13
Trade ISRG Now!
Famed short selling website Citron Research went after Wall Street darling Intuitive Surgical (Nasdaq: ISRG) Wednesday, causing a swift 4 percent downdraft in the stock.
Citron claims the company's popular da Vinci robotic surgical device has been sold using "fear" and the "medical arms race" meme. Meanwhile, weak evidence of surgical value and the botching of "routine" surgeries has lawyers taking notice, which the firm believes will take the company down a few notches.
Citron notes five new data points over the last four weeks that Wall Street is not paying attention to:
Three new highly credible lawsuits over hysterectomies with bad outcomes have been filed – in addition to six really ominous ones from earlier in the year
Large insider sales. Within the last month, Chairman Lonnie Smith sold shares from options exercise (not 10(5)b) netting over $50 million, a rather large percentage of his recently apportioned stake
Peer criticism – a number of recent articles summarizing from highly credible, recent studies that highlight the gap between the company marketing materials' claims and full scientific disclosure of the true risks and differentials in medical outcomes. This gap creates the basis for legal challenges to the company due to inadequate disclosure of the risks of bad outcomes.
Further skepticism about the true cost/benefit of robotic surgeries
Indications of loss of morale and sharp erosion of confidence in management and
oversaturation coming through the sales force.
Citron claims there is a "severe vacuum of real scientific evidence that the da Vinci is of any clinical benefit when the full arc of costs and outcomes are weighed."
The firm also talks about recent lawsuits describing disastrous results from "routine" surgery, including a cases were: one patient's intestines were hanging out of her vagina; another was uncontrollably passing urine out of her vagina, while two "routine" hysterectomies resulted in death of the patient, with apparent damage caused by the da Vinci device
Over the short term, Citron believes the stock can drop to $350/share and then to $250/share over the next 18-months.
The full report can be found here
Shares of ISRG last traded at $529.10, down 3.2%
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Citron claims the company's popular da Vinci robotic surgical device has been sold using "fear" and the "medical arms race" meme. Meanwhile, weak evidence of surgical value and the botching of "routine" surgeries has lawyers taking notice, which the firm believes will take the company down a few notches.
Citron notes five new data points over the last four weeks that Wall Street is not paying attention to:
oversaturation coming through the sales force.
Citron claims there is a "severe vacuum of real scientific evidence that the da Vinci is of any clinical benefit when the full arc of costs and outcomes are weighed."
The firm also talks about recent lawsuits describing disastrous results from "routine" surgery, including a cases were: one patient's intestines were hanging out of her vagina; another was uncontrollably passing urine out of her vagina, while two "routine" hysterectomies resulted in death of the patient, with apparent damage caused by the da Vinci device
Over the short term, Citron believes the stock can drop to $350/share and then to $250/share over the next 18-months.
The full report can be found here
Shares of ISRG last traded at $529.10, down 3.2%
Join StreetInsider.com FREE and get immediately alerted when news breaks on your stocks and other market items - JOIN NOW
*NEW - Download StreetInsider's FREE iPhone and iPad App - Click Here
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ISRG
Charles Stevens on Dec 20, 2012 03:45 PMMark as Spam | Reply to this comment
WithnFDA clearance of the da vinci robotic operating machine, I am curious who started the rumor that ISRG is over priced. WOW. I, on the ltdher hand, know a good deal when I see it. ISRG is only now getting started with increasing usage o the Da Vinci robotic operating machine and no competition, I believe that ISRG's sales and operating margins have no where to go but up. I will buy more on dips.