Critical Comparison: Intuitive Surgical (ISRG) & Cerner (CERN)

Intuitive Surgical (NASDAQ: ISRG) and Cerner (NASDAQ:CERN) are both large-cap healthcare companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Risk & Volatility

Intuitive Surgical has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500. Comparatively, Cerner has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500.

Institutional & Insider Ownership

32.8% of Intuitive Surgical shares are held by institutional investors. Comparatively, 81.8% of Cerner shares are held by institutional investors. 2.2% of Intuitive Surgical shares are held by company insiders. Comparatively, 13.1% of Cerner shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Intuitive Surgical and Cerner’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Intuitive Surgical $2.70 billion 17.40 $735.90 million $7.74 54.27
Cerner $4.80 billion 4.89 $636.48 million $2.01 35.13

Intuitive Surgical has higher earnings, but lower revenue than Cerner. Cerner is trading at a lower price-to-earnings ratio than Intuitive Surgical, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Intuitive Surgical and Cerner’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Intuitive Surgical 30.16% 18.20% 15.90%
Cerner 13.37% 18.03% 12.89%

Analyst Ratings

This is a breakdown of current ratings and target prices for Intuitive Surgical and Cerner, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Intuitive Surgical 0 4 12 0 2.75
Cerner 0 13 8 0 2.38

Intuitive Surgical currently has a consensus price target of $348.84, suggesting a potential downside of 16.96%. Cerner has a consensus price target of $69.31, suggesting a potential downside of 1.85%. Given Cerner’s higher probable upside, analysts clearly believe Cerner is more favorable than Intuitive Surgical.

Summary

Intuitive Surgical beats Cerner on 9 of the 14 factors compared between the two stocks.

Intuitive Surgical Company Profile

Intuitive Surgical, Inc. (Intuitive) designs, manufactures and markets da Vinci Surgical Systems, and related instruments and accessories. The Company’s da Vinci Surgical System consists of a surgeon’s console, a patient-side cart and a vision system. The da Vinci Surgical System translates a surgeon’s hand movements, which are performed on instrument controls at a console, into corresponding micro-movements of instruments positioned inside the patient through small incisions or ports. The da Vinci Surgical System provides its operating surgeons with control, range of motion, tissue manipulation capability and three-dimensional (3-D), high-definition (HD) vision. Intuitive has four generations of da Vinci Surgical System: the da Vinci Xi Surgical System, the da Vinci Si Surgical System, the da Vinci S Surgical System and the standard da Vinci Surgical System. The Company’s instruments and accessories include EndoWrist Instruments and da Vinci Single-Site.

Cerner Company Profile

Cerner Corporation (Cerner) is a supplier of healthcare information technology (HCIT). The Company offers a range of intelligent solutions and services that support the clinical, financial and operational needs of organizations of all sizes. The Company’s segments include Domestic and Global. The Domestic segment includes revenue contributions and expenditures associated with business activity in the United States. The Global segment includes revenue contributions and expenditures linked to business activity in Aruba, Australia, Austria, the Bahamas, Belgium, Bermuda, Brazil, Canada, Cayman Islands, Chile, Denmark, Egypt, England, Finland, France, Germany, Guam, India, Ireland, Kuwait, Luxembourg, Malaysia, Mexico, the Netherlands, Norway, Portugal, Qatar, Romania, Saudi Arabia, Singapore, Slovakia, Spain, Sweden, Switzerland and the United Arab Emirates. The Company’s solutions are offered on the unified Cerner Millennium architecture and on the HealtheIntent cloud-based platform.

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