Next Stop for This Winner: World Domination

Having placed a da Vinci surgical system in every state, Intuitive Surgical (Nasdaq: ISRG) is executing well on the next step of taking over the world. One out of four machines placed in the first quarter were outside the U.S., including seven in the new market of Japan.

And that's during a time when Europe's economic environment is characterized as "challenging." It can be hard to sell $1 million machines with hospitals tightening their capital-spending purse strings.

Still, the procedure growth in Europe was characterized as "strong." The same phenomena happened last year in the U.S., where the use of installed machines increased faster than the purchase of new machines. That can only happen for so long until doctors start fighting over the current machines and demanding management buy a second or third one.

In fact, the entire sales cycle in the rest of the world is trailing the U.S.; prostatectomies are still a big driving force, while in the U.S. their contribution to the increase in procedures has begun to wane. That means that gynecological procedures will likely be the next growth driver outside the U.S., as they followed prostatectomies here.

Intuitive Surgical doesn't break out total sales by geography, but from system placements it looks like the company still has plenty of room to run. There are 1,091 da Vinci systems in the U.S. compared with just 391 in the rest of the world. Older medical device companies have a large presence overseas and I expect Intuitive to follow suit:

Source: Company releases.

So why is Intuitive Surgical down today after a solid quarter that moved it closer to world domination? As Fool co-founder David Gardner warned readers of Motley Fool Rule Breakers on Wednesday, the large run-up before earnings means investors were expecting Intuitive Surgical's domination. (The stock was up 16% since April 7, the week before earnings.) David's advice: Don't worry about quarter-to-quarter variation. The secret is to hold long term.