NEW YORK (TheStreet) – Higher-than-expected fourth-quarter expenses rattled Intuitive Surgical (ISRG) - Get Intuitive Surgical, Inc. (ISRG) Report stock Thursday, sending its shares down more than 2% in after-hours trading. Even though the Sunnyvale, Calif., company delivered a 14% beat on earnings, investors were not impressed. They shouldn't be.

The stock has a consensus buy rating and an average analyst 12-month price target of $600, suggesting gains of 14% from current levels. But these estimates should come down.

Intuitive, which specializes in robot-assisted surgical procedures, said its expenses climbed 10% year over year for the period ending in December. The company's da Vinci robots are sold to hospitals; Intuitive, which competes againstStryker (SYK) - Get Stryker Corporation Report  in this area, makes money each time a procedure is done using its equipment. It's a high-growth business that requires high expenses to operate.

In this case, higher expenses wouldn't be so bad as long as its surgical profits were also rising. But Intuitive said its fourth-quarter surgical income declined 12% year over year. The company also said its fourth-quarter income from operations declined 11% year over year to $186 million. Sales haven't been spectacular in recent quarters either, with the company saying it sold 137 da Vinci surgical systems in the quarter, down from 138 sold in the fourth quarter of 2013.

Intuitive reported net income of $3.94 for the period ending in December. When adjusted for stock option expense and amortization costs, the company said its earnings were $4.92 per share, up 1% year over year.

The company, which pays no dividend, said revenue was $604.7 million, beating estimates of $589 million. But it represents year-over-year growth of just 5%. Full-year revenue fell 6% year over year to $2.13 billion. That's another reason investors are worried.

For a stock trading at a price-to-earnings ratio of 45 compared to the average P/E of 20 for companies in the S&P 500 (SPX) , Intuitive's stock wasn't cheap to begin with. Its P/E is more than twice the multiple of St. Jude Medical (STJ) (P/E of 22). Now that Intuitive's growth has decelerated, analysts will have to assess how these results align with their growth projections.

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The main question should be: Does Intuitive still deserve such a high multiple when earnings are growing at just 1% year over year?

After the company's earnings grew at just 4.7% last year, according toCNN Money, its earnings are projected to decline more than 34% this year. Part of the reason: concerns about how effective robotic surgeries actually are and whether it is worth the expense to hospitals and whether robot-assisted procedure are safe.

When factoring the potential effects of the Affordable Care Act, which adds a 2.3% excise tax on medical-device companies, Intuitive's profits may see increased pressure. In short, when a stock is expensive and a company is showing signs of slowing growth, that is a signal to stay away.

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TheStreet Ratings team rates INTUITIVE SURGICAL INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTUITIVE SURGICAL INC (ISRG) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: ISRG Ratings Report