Intuitive Surgical stock run leads healthcare group as Q4 report nears

Wed Jan 20, 2016 4:59pm EST
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By Lewis Krauskopf

NEW YORK Jan 20 (Reuters) - In a beaten-up stock market, Intuitive Surgical Inc stands out as the best-performing large-cap U.S. healthcare stock that is not an acquisition target.

Shares of Intuitive, which boasts a dominant position in surgical robotic systems, have climbed 13 percent over six months. Over the same period, the Standard & Poor's healthcare sector index has slid 13 percent, and the only stock in the index to top Intuitive's performance was Baxalta Inc , which recently agreed to be acquired for $32 billion by Shire Plc.

Intuitive's signature product, the $1.5 million da Vinci robotic system used in gynecological and prostate surgeries, has been used in more procedures and the company has seen improving profit margins, said RBC Capital Markets analyst Brandon Henry.

"They're kind of clicking on all cylinders" in recent quarters, he said.

A test for the stock's momentum could come after the market closes on Thursday, when the $20 billion market-cap company reports fourth-quarter results. The Sunnyvale, California, company has already announced that it expects a 12 percent increase in fourth-quarter revenue, which topped analysts' views, and expects procedures using the da Vinci system to rise about 9 percent to 12 percent in 2016.

It was unclear whether investors will find more to like in Thursday's report, or sell on confirmation of the pre-report. Pricing in the options market on Wednesday suggested a move of 6.3 percent in either direction by Friday.

With the S&P healthcare index down 7 percent on the year, Intuitive Surgical is one of only a few in the index in positive territory for 2016.

Intuitive's dominance in its market appealed to Baltimore investment counselor D.F. Dent & Co, which owned about 170,000 shares as of the latest filing data.   Continued...