In December of 2012, and January 2013, Citron exposed the vulnerability of Intuitive Surgical to a growing swarm of business concerns surrounding its very aggressive marketing of its sole product, its Da Vinci robot.
Goldman Sachs responded with a huge target raise, Morgan called it a “tempest in a teapot”, and every analyst in the name defended it. Now it’s six months later, and in the face of one of the hottest markets in history, Intuitive has warned, missed, reduced guidance, and traded down 40% from its highs. Although we are normally not ones to take a victory lap, the lesson learned is: "It’s not a problem … until it is a problem".
This lesson has been learned this week by Glaxo as they run afoul of Chinese Regulators on corruption charges.
At the present moment, Glaxo’s problems in China are a top business story. Several company employees have been arrested, while at least 10 company executives are under “house arrest”, with regard to allegations of corruption and bribes.
Tomorrow, after more than five months of deep investigation, Citron will release a story about anotherUS-based company (over a billion in market cap) doing large-scale business in China, that makes Glaxo look like a band of angels by comparison. This company is knowingly violating numerous laws in the PRC, some of which the country takes extremely seriously; and hoping Wall Street doesn’t notice. As usual, Citron backs up its findings with irrefutable hard evidence.
Citron will demand full accountability, and will encourage the street to take full note of the severe business risks this company's illegal behavior has exposed it to.