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Intuitive Surgical (Nasdaq: ISRG  ) beat analysts' expectations. Again. It raised 2012 revenue guidance to growth of 20% to 23% over 2011 compared with last quarter, when it expected to see growth of 19% to 21%.

Yet shares were knocked down more than 8%. Investors seem to be concerned about weak sales in Europe and a decline in prostatectomies in the United States.

I don't think they've been paying attention.

Prostatectomies in the U.S. haven't been a growth story for a while; most of the growth was from increasing use of the procedure in Europe. Hysterectomies have become the new rocket ship to grow revenue, and the company has been supporting surgeons' development of other da Vinci surgeries through the development of new accessories for its robotic-surgery machines. Growth of hysterectomies will eventually plateau, just like prostatectomies, and the company is smartly planning for another procedure to come in behind.

Even with the decline in U.S. prostatectomies, procedures grew approximately 26% year over year in the second quarter. That's nothing to sneeze at.

The weakness in Europe is certainly troubling, but it's not all that surprising. Governments in crisis having trouble paying for medical procedures and million-dollar machines? Shocker. MAKO Surgical (Nasdaq: MAKO  ) didn't sell any of its surgical machines in Europe in the second quarter. Investors in Boston Scientific (NYSE: BSX  ) and Medtronic (NYSE: MDT  ) should take note, especially for the surgical areas that might be a little more discretionary.

But unless you think the world is going to end, Intuitive Surgical's long-term trajectory isn't really affected by these macro issues. The company had the same sort of issue during the U.S. recession in 2009, when sales of da Vinci machines declined year over year. The stock has more than tripled since then.

ISRG Chart

ISRG data by YCharts

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Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Medtronic, MAKO Surgical, and Intuitive Surgical. Motley Fool newsletter services have recommended buying shares of Intuitive Surgical and MAKO Surgical. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (15)

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  • Report this Comment On July 21, 2012, at 6:38 PM, chris293 wrote:

    i was a real fool and made the mistake of selling a good amount of my shares to cover my losses in the financial mess. dumb? or on the other hand, smart since this cleans up my portfolio now and gives a clearer picture of what i am dealing with? mixed thoughts, but still learning how to do this.

  • Report this Comment On July 23, 2012, at 2:11 PM, EquityBull wrote:

    Great article. I agree with your synopsis. Panic sellers do not understand the long term story or what ISRG is really all about. As long as there is surgery the daVinci will be a tool of growing importance in every surgeons toolbox.

    There is always a risk of various "cures" too with some procedures. Imagine a cure for prostate cancer or vaccine like Provenge? It could wipe out this procedure. However ISRG will increasingly be less dependent on any single procedure and FDA approved uses expand.

    This is a great buying opportunity I have been waiting for over many months and will take advantage of those who do not understand what ISRG is all about. Also ISRG is a big buyer of their own stock so I welcome lower prices as a holder that plans on sticking with this story for 10 to 20 years and perhaps beyond that.

    I thank the day traders, bots and weak holders for giving up their positions because as a net buyer of stocks I welcome lower prices. Learned this from Buffett.

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ISRG $678.02 Down -3.80 -0.56%
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