In 2026 the attention of investors attracted successively: precious metals, later the blast of oil, then the rally of parts of semiconductor companies, and at the end of the debut of SpaceX. Meanwhile, somewhere in the background, quietly, prices of truly solid businesses fell. I have any examples for you of companies that went amazingly low for their standards and whose problems seem to be greatly exaggerated.
Intuitive Surgical (ISRG)
The first is the Intuitive Surgical, a global leader in surgical robotics, the creator of Da Vinci and Ion systems. Almost 12,000 Da Vinci and over 1,000 Ion are already in operation in the world, and the company's share of the surgical robotics marketplace is around 70%. Despite specified a strong position, ISRG shares present are about 42% below the highest and have returned to levels 5 years ago.
The marketplace is mainly afraid of slowing growth – revenues and profits are expected to increase by 14-15% per year, while earlier it was up to 24%. In addition, competitive robots, both Western and Chinese, appeared, which undermined the "unquestionable dominance" of the ISRG.
At the same time, investors seem to forget that surgeons are accustomed to Da Vinci and reluctantly change working tools, and behind ISRG stands a giant database collected for 26 years. Competition is just entering the marketplace and has to convince hospitals to do their occupation while ISRG continues to make its own systems, utilizing immense experience.
The valuation besides points out – the forward P/E is present lower than at the bottom of the 2022 bessa.
ServiceNow (NEW)
Similarly, the situation of ServiceNow, a company whose strategy helps to organize intra-corporate work – for example in the process of implementing a fresh employee. The product is good adequate that the contract renewal rate reaches 98%. Nevertheless, the company's rate has fallen by 56% from the summit, as the marketplace fears that AI agents will take over any of its tasks. The problems of another software companies add pressure. Meanwhile, ServiceNow is not afraid of AI – on the contrary, he wants to gain from it. The company develops the concept of a strategy that supervises AI agents, empowers them and monitors their operations.
Moreover, half of the customers are already paying not for the license, but for consumption, making the model more flexible. ServiceNow systems are profoundly integrated with client activities, so they are hard to replace. The company is expected to grow by about 20% per year and the forward P/E is only 25, while the average of the last decade is 60-70. In 5 years, the rate dropped by 10%, even though the profit increased 10 times. The fear of AI seems a small overly exaggerated. By the way, a comprehensive analysis of ServiceNow is available in ]]>Trader Wallet]]>.
Netflix (NFLX)
Another example is Netflix, a brand that no 1 needs to be introduced to. Quotations dropped by almost 50% from the top. Revenues grow slower – around 12% per year – and the competition is huge: HBO, Disney, AppleTV, Prime Video. In addition, there is uncertainty about the entry into live sports broadcasts and the increasing popularity of platforms with short content, which perfectly scope audiences with an expanding concentration capacity. Netflix is just about to enter this format.
Nor was the marketplace satisfied with the decision to limit the reporting of subscribers. However, the foundations stay strong: profitability is the highest in history, Netflix has a immense base of non-English content, and estimates propose very low churns (the percent of subscribers resigning) – about 2%, much little than in competition.
The company raises prices, develops cheaper plans with advertisements, and forward P/E fell below 20. Netflix is simply inexpensive present against the American market.
Continue reading: ]]>5 solid companies after major declines. An chance or a trap?]]>
]]>What is ROE?]]>
Author: ]]>Marcin Kremec]]>
