Blowout -- that is just one very appropriate word to describe second-quarter results for Motley Fool Rule Breakers recommendation Intuitive Surgical (NASDAQ:ISRG).

Analysts were looking for revenue of $44.5 million. It increased 70% and came in at $52.8 million. Earnings? Expectations of $0.21 were not even close to the $0.40 a share earned -- roughly three times what the company earned in the same quarter last year.

Those record results sparked a surge in the stock price. The stock's previous high was $54.20 (and the stock closed at $51.30 yesterday). Shares have hit $65.00 -- a staggering $13 (26%) one-day gain.

Driving all this good news is the da Vinci Surgical System -- a robotic system that performs minute, precise cuts and sutures that surgeons cannot. The result is improved survival rates that leave patients with less pain, shorter recovery times, and smaller scars.

Unit sales on the da Vinci rose to 26 -- seven more than the same quarter last year. Better yet, recurring revenue -- instrument, accessory, service, and training revenue -- was 46% of sales. Selling systems is important and drives recurring revenue. But recurring revenue is a building feather bed that will support operations (no pun intended) if hospitals get a short-term case of the capital-budget chills. Note too that the increase in recurring revenue (86.9%) far outdistanced system sales growth of 57.5%.

The three analysts following the company will need to update their earnings forecasts for 2005. Intuitive Surgical has already earned $0.64 in six months, so their $0.93 a share for the year looks, well, downright sick. Still, investors may scoff at the stock's $65.00 price: "Too high."

Rule Breakers often trade at premium levels. That happens when companies can fundamentally change how business is done (in this case, surgery). Provided such conditions hold, it's generally difficult to determine a fair valuation is. Many sit in colleague Stephen D. Simpson's camp: When he was looking ahead to last night's earning report, he lamented, "I'm kinda hoping for a minor hiccup in the quarter and a sell-off in the stock." That logic keeps many interested buyers on the sidelines because they see the promise, but also the high price. But when good news does arrive, the pent-up demand sends the stock explosively to the upside.

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Fool contributor W.D. Crotty does not own shares of Intuitive Surgical -- and certainly regrets that. The Fool has a disclosure policy .