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Another quarter, another strong performance from Intuitive Surgical (NASDAQ:ISRG). After the market closed, the company reported Q4 earnings of $248 million, up from $200 million a year ago. Revenues came at $609 million, compared to $497 a year ago. These results are certainly a sign that the momentum is coming back in the stock. What should investors do?

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Company

Forward PE

Qtrly Revenue Growth

Qtrly Earnings

Growth

Operating Margins

Intuitive Surgical

28.73

20.4%

49.8%

40.14%

Accuray Incorporated (NASDAQ:ARAY)

--

-17.60

--

-15.8

Medtronic (NYSE:MDT)

11.91

1.80

-25.80

28.45

Source: Yahoo.com

Accumulate the stock in any pullback, as the company's fundamentals remain strong.

Intuitive Surgical is in the robotic surgery business, which is growing by leaps and bounds. The company designs and manufactures state-of-the-art technology like the Da Vinci Surgical System for various procedures such as urologic, gynecologic, cardiothoracic, and general surgeries. The Da Vinci System consists of a surgeon's console or consoles, a patient-side cart, and a 3D vision system.

Intuitive Surgical enjoys a number of advantages that give the company a near monopoly in this area. There is a "first mover" advantage, which made the Da Vinci Surgical System a standard in the industry. Also, there are the economies of scale, which gives the company a cost advantage.

Then there is the bundling of hardware with services like doctor training, which makes the cost of switching to different machines prohibitively high.

SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

Market pioneer and leader

Large patent portfolio

Steady revenues from maintenance and accessories for its da Vinci system

Heavy reliance in one product that retails $1.5 million

Heavy spending on R&D.

Product catered to large hospitals

Plenty of room to grow with ne applications; favorable demographics-aging of the baby boomers

Operates in a highly regulated environment at the whim of political changes

A great deal of liabilities from accidents

Training requirements may limit growth

The bottom line: Intuitive Surgical is a company with multiple competitive advantages that seal it from the competition - A good investment for long-term investors.

Source: How Intuitive Surgical Wins