Earnings season has been rolling for a couple weeks now, but we don’t own the stocks that mostly report early (like the big banks), so we’ve had to patiently wait for new information to come in… and that starts, just barely, this week, with the reports from Intuitive Surgical and Crown Castle… things will pick up dramatically on that front in another couple weeks, when big tech reports and everyone starts freaking out. I’ll share my thinking about those, and a change to my portfolio as a result, and a few other minor updates, then we’ll get into discussing the new company I just added to the portfolio.

Intuitive Surgical (ISRG) is suddenly back to “growth darling” status after a strong earnings report, mostly because the growth in “elective” surgery has finally ticked back up after several years of fits and starts during and after the COVID shutdowns (while hospitals were overwhelmed with the pandemic, nobody was getting prostatectomies or bariatric surgery unless it was really an emergency). ISRG “missed” the earnings expectations and offered weakish guidance last quarter, and this week they essentially turned the sentiment around completely with a “beat.”

The big deal for Intuitive Surgical is procedure growth, partly because the high-margin, recurring part of their business is the semi-disposable attachments and accessories that are used for each surgery… and partly just because more procedures means more machines are needed. The big news this quarter was a dramatic increase in the outlook for procedure growth this year, that guidance had been for 12-16% growth and is now for 18-21% growth.

Which means a big pop in the share price, and it’s now a very expensive stock again… which might be fair, given their continuing near-monopoly position in surgical robotics and the overwhelming market presence they have, but it doesn’t make the stock particularly easy to buy at $300. The financial metrics just don’t support that kind of valuation unless you want to lean heavily on very long-term growth, which is always more challenging when interest rates are rising — right now, ISRG is valued at close to 60X forward earnings, but doesn’t have much potential to improve margins much, even if they get growth going again… and is only likely to grow earnings per share by 15% or so. That isn’t a shocking valuation for ISRG, they’ve often traded at higher valuations than that (though ...