RPT--Intuitive Surgical stock run leads healthcare group as Q4 report nears

(Repeats story published on Jan 20, no changes)
By Lewis Krauskopf
NEW YORK, Jan 20 (Reuters) - In a beaten-up stock market,
Intuitive Surgical Inc ISRG.O 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 .SPXHC has slid 13 percent, and the only stock in
the index to top Intuitive's performance was Baxalta Inc
BXLT.N , which recently agreed to be acquired for $32 billion
by Shire Plc SHP.L
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.
"If you run a hospital and want to buy a surgical robot,
Intuitive Surgical is basically the only option you have," said
Gary Wu, vice president at D.F. Dent.
Wu said D.F. Dent was neither adding to or reducing its
position. He said some investors could be reluctant to purchase
Intuitive shares because of its valuation.
At $556 a share, the stock is trading at about 27 times
forward 12 months earnings estimates, nearly double the 15 times
for the broader S&P 500 index .SPX . Still, a pricey multiple
is not unusual for the company, with its current P/E ratio below
the 35 times the stock has traded at on average over the past
decade.
Looming competition could sway the stock going forward.
Large medical device companies, such as Johnson & Johnson (N:JNJ)
JNJ.N and Medtronic (N:MDT) MDT.N , are developing competing robotics
products as are smaller firms such as Titan Medical Inc TMD.TO
and TransEnterix TRCX.A .
"Intuitive has been the only game in town for the last 10
years," said Greg Chodaczek, an analyst at Sterne Agee CRT. In
Medtronic and J&J, "you have two formidable competitors on the
horizon."
On Thursday, the company is expected to provide a more
complete picture of its results, including its quarterly
earnings and margins.
"The stock has had a decent move, so if they don't say
anything new, do folks take some of the profits and wait until
next quarter? Maybe," said Tao Levy, an analyst at Wedbush
Securities, who is bullish on the prospect for adoption of
robotic procedures and rates the stock "outperform."