UPDATE 3-Intuitive profit tops expectations but shares fall

* Q1 EPS $2.12 vs Street view $1.68

* Revenue $329 million vs $188 mln a year ago.

* Shares down 2.8 pct after run-up
(Adds outlook, analyst comment, sales details, updates shrs)

By Bill Berkrot

NEW YORK, April 15 (BestGrowthStock) – Intuitive Surgical Inc
(ISRG.O: ) reported much better-than-expected first-quarter
profit on increased U.S. demand for its expensive da Vinci
surgical robot systems and robotic procedures.

Based on the strong first quarter results the company said
it now expects 2010 revenue to rise by 27 percent to 29
percent, up from its previous forecast for 25 percent growth.

Intuitive posted a net profit of $85 million, or $2.12 per
share, compared with a profit of $28.1 million, or 72 cents a
share, a year ago, when a revenue deferral reduced results by
30 cents. That blew past analysts’ average expectations by 44
cents, according to Thomson Reuters I/B/E/S.

But after initially climbing, shares in the company fell
nearly 3 percent after-hours despite the earnings beat.

“We’ve come to expect a lot of volatility around Intuitive
Surgical earnings,” said Les Funtleyder, an analyst for Miller
Tabak & Co.

“It was a great quarter, but in the last three days the
stock has run from $353 to (an intraday price of) $393, so a
little sell on the news shouldn’t be out of the question,”
Funtleyder said.

Intuitive’s share price has more than tripled in the last
year and is up some 26 percent so far this year, making it a
very expensive stock.

“It would be hard to bet against these guys, but the
valuation is expensive so it does worry us a bit,” Canaccord
Adams analyst Jason Mills said.

The stock’s valuation looks expensive relative to its
group, Mills said, but “as they continue to exceed
expectations, it certainly makes the valuation argument more
difficult for those that want to be bearish on this stock.”

Revenue rose to $329 million from $188 million a year ago,
exceeding analysts’ estimates of $294.8 million.

Intuitive sold 104 da Vinci surgical systems in the
quarter, up from 66 in the year-ago quarter. Systems revenue
was $155 million compared with $70 million a year ago.

Of those 104 systems, 80 were sold in the United States,
but just 11 new systems were sold in Europe.

While procedure growth in Europe was strong, the company
said pressure on hospital capital spending in Europe was taking
a toll on da Vinci sales there.

The newer da Vinci systems cost about $1.4 million each and
are most often used for hysterectomies and prostate surgery.
Their use has been associated with significantly shortened
hospital stays and fewer complications.

There are now a total of 1,482 da Vinci systems worldwide
the company said, noting that 44 of the robotic systems sold in
the first quarter were to repeat customers.

Instruments and accessories revenue rose to $123 million
from $80 million a year ago, helped by higher initial
instrument and accessory stocking orders, and da Vinci
procedures increased about 37 percent.

Intuitive told analysts on a conference call that it still
expects 35 percent procedure growth in 2010.

Gynecological procedures were an especially strong growth
area, the company said.

The company said it added nearly 100 new hires in the
quarter with about half of them sales and marketing jobs.

Intuitive shares fell to $377 in extended trading from
their Nasdaq close at $388.01.

Asked if investors might be disappointed that the company
did not raise its forecast more aggressively, Funtleyder cited
Intuitive management’s tradition of caution.

“Generally this company has a history of being conservative
early in the year,” he said.

“They raised it slightly, and if the economic situation in
the U.S. improves we think the forecast will go higher.”

Stock Market Trading

(Reporting by Bill Berkrot; additional reporting by Deena
Beasley in Los Angeles, editing by Gunna Dickson, Leslie
Gevirtz and Bernard Orr)

UPDATE 3-Intuitive profit tops expectations but shares fall