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Intuitive Surgical (ISRG), one of the more well-known momentum firms on the market today, reported excellent first-quarter earnings after the close Tuesday. We don't view the firm as yet a 'Valuentum' stock (a style of investing that we ascribe to) as it has yet to reach a valuation that we find attractive. We're sticking with our fair value estimate for Intuitive Surgical at this time.

The robotic medical-equipment firm, best known for its da Vinci Surgical System, reported first-quarter 2012 revenue of $495 million, which advanced an impressive 28% from the same period a year ago (consensus was at $477 million). The key drivers continue to be higher robotic procedure adoption and higher da Vinci Surgical System sales. First-quarter instruments and accessories revenue jumped 32%, while systems revenue increased 24%. The firm's da Vinci systems continue to gain traction in the health-care community, with the firm selling 140 systems in the period versus 120 systems in the same quarter a year ago (up 16%). We continue to expect explosive growth in da Vinci sales.

Here's some background on the da Vinci:

Intuitive Surgical's da Vinci® Surgical System combines superior 3D high definition vision, patented EndoWrist® instruments and Intuitive® motion to allow for unparalleled precision, visualization, dexterity and control. The end result: a breakthrough in surgical capabilities that is changing the experience of surgery.

Surgeons and patients around the world have found da Vinci Surgery to be safe and effective minimally invasive treatment option for a range of complex conditions. In fact, roughly 3,000 peer-reviewed studies have been published demonstrating the clinical effectiveness of da Vinci Surgery.


The firm did a fantastic job translating its top-line growth into profit expansion during the quarter, with operating income jumping over 30% during the period. Intuitive Surgical's net income per diluted share expanded to $3.50 (consensus expectations were at $3.14 per share), up more than 35% from the year-ago quarter.

Looking ahead, investors should expect continued strong fundamental performance from Intuitive Surgical and strong adoption of its innovative da Vinci system. The only issue we have with adding the firm to the portfolio in our Best Ideas Newsletter is valuation. We're waiting for a more compelling entry point. In the spirit of transparency, we show the performance of our Best Ideas portfolio below:

(Click to enlarge)

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: We Loved Intuitive Surgical's First-Quarter Results But Shares Are Not Cheap

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