Mako Surgical Corp MAKO.O shares plunged 40 percent, after the medical device maker said it would sell fewer-than-expected surgical robots this year, raising concerns that the company is struggling to find takers for its technology.
The cut in sales outlook for its RIO System robots, a robotic-arm interactive system used for minimally invasive knee procedures, is Mako's second in as many months.
Including Tuesday's losses, the stock has shed about 65 percent of its value since the company first warned on RIO sales in May.
"RIO System sales in particular disappointed, while procedures were just below our estimate," Michael Matson, an analyst with Mizuho Securities USA, wrote in a note to clients.
Mako, which makes robotic devices that help surgeons conduct less invasive operations, now expects to sell 42 to 48 RIO systems in 2012, down from its earlier forecast of 52 to 58 RIO systems.
The company also lowered its full-year outlook for the number of MAKOplasty procedures to 11,000 to 12,000, compared with its prior view of 11,000 to 13,000 procedures.
MAKOplasty is a procedure for total hip arthroplasty and partial knee resurfacing.
"It appears that MAKOplasty adoption has slowed and that MAKO is struggling to gain traction beyond its initial earlyadopter customers," Matson said.
Matson halved his price target on Mako's shares to $15 from $30. Brokerage Canaccord Genuity also lowered its price target on the stock to $16 from $29.
Traders have exchanged about 28,000 options contracts in Mako during the first half of Tuesday's trading session, well above the average daily options volume of 3,988 contracts, according to Interactive Brokers data.
"The risk as reflected by the options market remains substantially elevated relative to the last six months," said Ophir Gottlieb, managing director of options analytics firm Livevol in San Francisco.
"This reflects the possibility that more market moving news could come out in the near term even before earnings."
Interactive Brokers Group options analyst Caitlin Duffy, however, said some strategies in play in the options market on Tuesday morning suggest the stock may have sold off a bit too hard.
Additionally, put sellers populating the stock appear to be betting shares are unlikely to hit fresh lows in the near term, Duffy said.
Shares of the Fort Lauderdale, Florida-based company fell 41 percent to a one-and-a-half year low of $14.51 on the Nasdaq on Tuesday. Nearly 1.6 million stocks, 12.7 times their ten-day average, exchanged hands at 1331 ET. They were the biggest percentage loser on the exchange.
(Reporting by Shailesh Kuber and Prateek Kumar in Bangalore, and Doris Frankel in Chicago; Editing by Saumyadeb Chakrabarty)