MAKO Surgical Corp: A nightmare for its investors
MAKO Surgical Corp (NASDAQ: MAKO), is a company that develops and markets robotic equipment for orthopedic surgery. The company offers MAKOplasty, a surgical solution that enables orthopedic surgeons to treat patient specific, osteoarthritic disease which is performed using its Robotic Arm Interactive Orthopedic system (RIO).
MAKO shares traded down to a 52 week low after the company updated on RIO System sales and MAKOplasty procedure volume for fourth quarter and fiscal 2012. The shares fell as much as 14% following the release but later retraced back to end the day (-5.43%) at $11.33 on January 7, 2013.
The sales figures were in line with the company’s expectations yet it shares took a hit because investors wanted the company to beat expectations, rather than just meet them. Unfortunately for investors, the tale of last year’s tape has been a nightmare – the stock is down more than 50% since January 2012. The firm has consistently shown poor performance by missing sales expectations and investors are concerned about its future. MAKO Surgical announced that they sold 15 RIO Systems and performed 2,904 procedures without any financial data as they plan to make a presentation before investors at the J.P.Morgan Healthcare conference on January 9, 2013.
MAKO Surgical Corp has an Underperform rating based on Market IQ’s proprietary Fundamental and Sentiment Metrics. The company exhibits poor Financial Strength and has Quality numbers which are worse than 75% of the companies within the peer group. MAKO is also expensive relative to its peers and is the least profitable in its peer group. Based on our analysis the outlook of the company looks gloomy since it is the worst performer among its peers as shown below.
Technical analysis for MAKO also depicts a bleak outlook for the stock’s future. In the month of July 2012 the stock plummeted owing to a dreadful quarterly performance where their sales came in low. For a small company like MAKO that is trying to convince the medical community that its products are worth using, declining sales are considered a major red flag. The company was forced to issue a secondary stock offering in November 2012 in an attempt to raise more capital to fund their activities since their revenue fell short of expectations.Since the drop in July the stock has never been able to recover properly and the bearish momentum has continued. Even the recent market rally in 2013 has failed to grab attention of investors for this company. The stock broke a key support level of $12 on January 4, 2013 and looks to go much lower. The breakdown was confirmed on January 7, 2013 after the stock closed down 5.43% to end the day at $11.33.
A key thing to notice on the daily chart of MAKO above is the increase in trading volume. With an average daily trading volume of 1.102 million shares, almost 4 times the number of shares traded hands trying to break a key support level on January 7, 2013.
MAKO Surgical Corp was decimated last year losing a significant portion of their market capitalization. The company’s dwindling sales, weak demand for its products and increase in the number of downgrades from Wall Street analysts should be perceived as a clarion call to run away from MAKO for those already invested in the company and for others it presents a great opportunity to short the stock.
Commentary by: Fahad Kamr, CFA Adil Yousuf www.themarketiq.com [email protected] 1800.604.0647
This commentary is for informational purposes only and does not constitute investment advice. The opinions offered herein are not recommendations to buy, sell or hold securities. Market IQ expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.
