There are a large number of cattle stocks in the US stock market. in addition to the well-known big companies such as Apple Inc, Alphabet Inc-CL C and Amazon.Com Inc, there are also many giants in subdivided industries. For example, Intuitive Surgical is the king in the field of surgical robots.
The company has risen more than 110 times since it went public in 2001. Before this year, Intuitive Surgical also maintained an eight-year record of consecutive increases, with a cumulative increase of more than seven times.
But intuitive surgery shares have fallen so far this year, down 39% so far, which may be related to the following reasons:
On the one hand, affected by the epidemic, surgical operations of some patients have been postponed, the number of operations in hospitals has declined, and the price of raw materials has risen sharply due to disruption of supply.
On the other hand, the global economy could fall into a prolonged recession, with the market worried that hospitals are planning to cut capital spending, thus affecting the business of surgical robots.
In addition, the Fed's rate hike and contraction schedule also put pressure on high-valued stocks.
The most advanced surgical platform-- Leonardo da Vinci surgical robot
The main product of intuitive surgery is Leonardo da Vinci surgery robot, which is mainly used in prostate cancer surgery, gynecological surgery and so on. Compared with traditional manual surgery, Leonardo da Vinci surgical robot is more accurate, can deal with details and areas that cannot be handled by human hands, has less surgical trauma, can shorten the length of stay of patients, and reduce tissue trauma and postoperative adhesion.
Relying on technical barriers, first-mover advantages and doctors' habits of using Leonardo da Vinci, the company has established a broad moat and won a hegemonic monopoly.As of Q3 in 2021, Leonardo da Vinci surgical robots of intuitive surgery accounted for about 88% of the global market for soft tissue surgical robots.
Let's take a look at the products and services of intuitive surgery (data from Quarterly report 2022):
Each Da Vinci robot sells for between $500000 and $2.5 million.
Due to the limited service life of instruments and accessories, they need to be replaced frequently, and there is an income of US $600 to US $3500 for each operation.
Service contracts (including after-sales service, maintenance, testing, training, etc.) are usually signed when selling or leasing robotic systems, with an annual fee of between $80, 000 and $190000.
In the first quarter of this year, intuitive surgical robot systems sold $428 million, instruments and accessories totaled $810 million, and services earned $249 million. That is to say,Leonardo da Vinci, the most distinctive surgical robot, accounts for less than 30% of its revenue, and more than 70% of its income comes from consumables and services.
Actually,This income structure is the embodiment of the "razor and blade" business model-which is what attracts investors most.
Razor and Blade mode
The "razor and blade" model was invented by Gillette Razor, whose business model has the advantage that customers can only replace their blades later after they buy their razors. For intuitive surgeryAfter making an one-time income from selling the robot, it can also get rid of the already sold through consumables and services.In the robotGenerate continuing business revenue。
In contrast, intuitive surgery has more obvious advantages.Because of the limited start-up times, consumables are replaced frequently, and in the later stage, the income from consumables and maintenance training exceeds the income from selling equipment, and has the pricing power, and its gross profit margin has been maintained at about 70% for more than ten years.
In addition, Gillette razors have alternatives, but intuitive surgery is difficult to replace, because as long as hospitals become their customers, they are firmly bound at a later stage, which is characterized by a high transfer cost business model.
With the wide promotion of Leonardo da Vinci surgery system and the increasing use of doctors, the shipments of intuitive surgery system and the number of operations performed by a single system will increase significantly, and the income from consumables and maintenance training will continue to rise. this will enhance the company's sustainable profitability.
The hegemonic position is difficult to shake.
Of course, intuitive surgery is not the only one in the field of surgical robots, and there are also companies in the same industry.$Medtronic PLC (MDT.US) $HugoRAS, TransEnterix (renamed to$Asensus Surgical (ASXC.US) $), MedTech, Medrobotics, Cambridge Medical Robotics, Siemens, Xerox,$Stryker Corp (SYK.US) $Wait. In recent years, a number of participants of surgical robots have emerged in China, such asBai Huikang, Tianzhihang, Kingsoft Technology, Vega,$minimally invasive robot-B (02252.HK) $The application fields of surgical robots are different in different companies.
Considering that the technology of intuitive surgery is obviously ahead, and the new competitive products are often difficult to compete with established players, especially surgical robots require doctors to pay more learning time.Intuitive surgery is expected to remain the market leader in the next 5-10 years.。
Some analysts pointed out that the impact of the epidemic on intuitive surgery is temporary, and the long-term trend is beneficial to the company's business. With the increasing use of robot-assisted surgery, the global market for surgical robots is expected to grow at a compound annual growth rate of 14.2% in the next six years, reaching an estimated $17 billion by the end of 2028.
Is the moat of intuitive surgery strong enough?
Has the negative factors been digested by the fall in stock prices?
Is this the best time to buy?
You are welcome to discuss in the message area.
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Edit / lydia