What drives stock prices? Intuitive Surgical and Google
Two stocks to watch today are Google and Intuitive Surgical (other than Goldman Sachs after the fraud accusation).
Intuitive Surgical reported spectacular results today far ahead of analyst expectations with earnings coming in at $2.12 per share compared to the expected $1.69. Intuitive has beaten expectations in 6 out of the last 8 quarters and more than tripled in a year. In spite of that it continues to remain a good investment as it continues to surpass expectations. The stock price was driven up a lot in anticipation of great earnings over the last couple of days. Suddenly after the report today the stock price has fallen nearly 5%.
Google also dropped over 6% in spite of beating analyst expectations because they plan to spend more aggressively to maintain their search lead. Google has also beaten analyst estimates in the past 7 quarters.
So what makes people drive down the stocks of companies that show repeated excellent performance. Why do investors question decisions form companies that have consistently done things right? The answer is because they can. Well, not really. The answer is that the stock prices are needlessly driven way up before earnings and that leads some investors to sell to take profits as soon as results are announced.
I put both these stocks at a buy and today with the negative tone that the market has taken might be a good time to get into either one.
Disclaimer: I own both stocks.
Hi,
it would have been better, if some in-depth analysis for the “BUY” take was given. Merely suggesting that these stocks have performed consistently, may not be a sound advice.
Just my take.
Well with the current meltdown, all I can say is I reiterate buy ratings as the stocks have fallen further. With Intuitive Surgical having no competition to the Da Vinci robot system, which is wanted by more and more hospitals around the world. Also once a hospital buys one, they need to get a lot of related items for using and maintaining the systems from Intuitive.
With Google, even though they pulled out of China, they will continue to do well in the future thanks to their leadership in search in most of the world and now with Android devices being as popular as the iPhone and Google continuing to innovate, there is little doubt the company will continue to give better results.
As far as stock prices go nobody can say if they will go up or down but these companies are fundamentally sound.