It's been a solid year for Intuitive Surgical (ISRG). Shares of the $21 billion surgical equipment firm have rallied close to 16% so far this year. Intuitive develops and sells robotic surgical systems for hospitals that want to be able to perform less-invasive surgeries than would be possible if done by a surgeon's hand. The firm's da Vinci system is currently deployed in more than 2,000 hospitals around the globe.
There's a lot to like about the robotic surgery business. For starters, it offers palpable advantages to patients, who see fewer complications and faster recovery times with smaller incisions. ISRG's installed base only covers a small number of the world's hospitals, but it's effectively the only established robotic surgery equipment vendor out there. As a growing number of surgeons get trained on the da Vinci system, switching costs of adopting a new platform start to get quite high, giving ISRG a sticky customer base and a big competitive advantage. The firm is also able to earn large recurring revenues by servicing machines and selling surgical instruments.Like Under Armour, Intuitive Surgical is hardly a value stock. But again, growth more than makes up for any premium pricing that investors have been paying for shares (and that premium has been shrinking too as fundamentals catch up with share price). With no debt and more than a billion dollars in cash, ISRG looks stellar from a financial standpoint as well. We're betting on shares this week.
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