Intuitive Surgical designs, manufactures and markets da Vinci Surgical Systems and related instruments and accessories. A da Vinci Surgical System consists of a surgeon's console, a patient-side cart and a vision system. The da Vinci Surgical System is designed to provide its operating surgeons with control, range of motion, fine tissue manipulation capability and Three Dimensional, High-Definition vision while allowing surgeons to work through the small ports enabled by minimally invasive surgery procedures. Co.'s products fall into four categories: da Vinci Surgical Systems, InSite and Firefly Fluorescence imaging systems, instruments and accessories, and training technologies.
In our opinion, ISRG’s economic moat is result of installed base of more than 3,200 da Vinci systems and impressive clinical history. Once a hospital purchases Intuitive's system, switching costs become exorbitant as the average system price around $1.4 million represents a large portion of a typical hospital's annual capital expenditure budget. The biggest threat to Intuitive's moat is the future of robotic surgery in general. It is plausible that cash-strapped hospitals that receive no additional reimbursement for robot usage but this seems unlikely.
After a period of excellent growth ISRG has slowed. With more focus on cost control in the U.S., coupled with a rather well-saturated field, the company will increasingly rely on growth internationally, where it has seen more scepticism in the past. On February 2nd, management announced a $1 billion share repurchase program. While the timing of the buybacks will depend largely on market conditions. Shares of ISRG have been among the most volatile in the sector over the past year. The stock seems to be trading at fair value.
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da Vinci system can assist in multiple types os procedures
No rivals and a growing base of users
Firms utlization rate is far below its maximum.
Emergence of some competition for lower-cost procedures
Robotic gynocology is likey to suffer owning to the FDAs warning regarding power morcellators used to remove tissue
Large installed base creates ongoing sales and service revenue opportunites
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