If you want to spook older medical technology analysts, come up behind them really quietly and then yell "medical lasers." It seems to this Fool that just about every medical device analyst who stuck their neck out and supported a laser company ultimately came to regret it (including yours truly).

Now, Syneron Medical (NASDAQ:ELOS) isn't exactly your run-of-the-mill medical laser company, but the basic idea still holds true. After all, cosmetics and aesthetics have been a beastly competitive market in the past, and most contenders end up as pretenders. So the question here and now is whether this small Israeli company has the goods to turn the tide.

Unfortunately, the fourth quarter really doesn't prove much one way or the other. Skeptics will no doubt harp on the fact that the company had to preannounce a disappointing quarter and saw basically flat sequential performance in what should have been a strong quarter. On the other hand, optimists will point to 36% year-on-year growth, 57% growth in operating income, and stable, not to mention exceptionally high, gross margins.

And then there's also the pipeline to consider. In addition to an already-approved product for cellulite reduction, Syneron is hoping to file for FDA approval of a dental laser in the second half of 2006, and a non-invasive fat reduction device in the first half of 2007. What's more, a new aesthetics line is coming out shortly, and the company continues work on a home-use skin rejuvenation device that it hopes will be ready for commercialization in a year or two.

Now here's some of the less-good news. Free cash flow, though up nicely, grew less than income. What's more, receivables are very high and days sales outstanding took quite a jump from the prior quarter. And then you also have to consider the threat of ongoing competition from the likes of Palomar Medical (NASDAQ:PMTI), Candela (NASDAQ:CLZR), and the like.

If I were an investor here, I'd be most concerned by guidance that would seem to suggest two straight quarters of basically flat growth. Normally quarter-to-quarter movements don't interest me much, but this might be the exception. After all, the history in this sector is for rapid initial acceptance of new technology and/or new applications, followed by stagnation and "me too" competition. It goes without saying that Syneron's future success as a company and as a stock rests upon rising above the competition and really becoming the new standard in aesthetic treatments. Only time will tell.

For more Foolish thoughts on lasers and aesthetics:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).