2012-01-05 / The Motley Fool

The Motley Fool Take

Intuitive Surgical: Plenty of Room to Grow

When Fool co-founder David Gardner first recommended Intuitive Surgical (Nasdaq: ISRG) in 2005, it was trading at $44. Recently the stock was near $435. Despite its meteoric rise, there’s still room for growth. Intuitive’s minimally invasive robotic surgical system continues to find increased acceptance for more clinical applications and to see increased use in the U.S. and abroad.

The number of surgical procedures performed with Intuitive’s da Vinci system in the quarter ending Sept. 30 increased about 30 percent year over year. But the real growth potential is in its adoption and use beyond just hysterectomies and prostatectomies.

Those two procedures represented about 75 percent of all da Vinci procedures performed in 2010. Yet in the U.S. alone, Intuitive has FDA clearance for another dozen surgical applications — and worldwide, the system has reportedly been used to perform nearly 100 different types of surgeries.

With increased adoption and use of the system, recurring instrument and accessory sales (for items that wear out with use in surgery) and higher-margin service contract renewals should continue to grow.

Intuitive’s expected growth rate exceeds those of other established medical technology and device companies. Investors willing to take on some risk might want to consider it. (Motley Fool newsletter services have recommended Intuitive Surgical.) ¦

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