After today’s close, we’ll see earnings out of Intuitive Surgical, Inc. (NASDAQ: ISRG). The estimates for the DaVinci robotic surgical device maker from First Call are $0.98 EPS on $178.21 million in revenues.  Next quarter estimates are $1.19 EPS on $202.76 million in revenues. Estimates for fiscal Dec-2008 are $5.12 EPS on $857.30 million in revenues.

As this one has stayed strong and been up huge, this is well above key longer-term  moving average we like to use for trend establishments.  The 50-day moving average is $306.41 and the 200-day moving average is $267.04.  With shares flirting at $349.11, it’s a long way above those to determine key long-term support levels.  Options expire tomorrow, but traders appear to be braced for a move of $19.00 to $21.00 in either direction.

Analysts have an average price target north of $356.00.  Intuitive Surgical’s 52-week trading range is $120.54 to $359.59. 

This has been a major growth stock, and the earnings report here will either allow that status to prevail or it will seek a "market adjustment."  While that is stating the obvious, this earnings and guidance call could be a critical juncture for the stock.  As this stock has risen more than 20-fold over the last 5-years, you can imagine that this one will be closely watched.  Throw that in with charity hospitals and other quasi non-profit hospitals recently being under some tighter spending, and you’ve got a horse race. 

With 2.5 million shares short and with a fairly low open interest in current month stock options, the trading activity is likely to be the value and growth buyers forming their longer-term opinions after such a long stock run.

Jon C. Ogg
April 17, 2008

Jon Ogg produces the Special Situation Investing Newsletter.  He can be reached at [email protected] and he does not own securities in the companies he covers.

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