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Shares of Intuitive Surgical, Inc. (ISRG - Analyst Report) spiked 12.7% yesterday following the approval of its new and improved da Vinci robotic surgical system by the U.S. Food and Drug Administration (FDA).

Intuitive Surgical revealed that the new robotic system, known as da Vinci Xi, has longer instrument shafts enabling greater reach for surgery. The robotic arms of the system are also smaller and thinner and have a new joint design that improves their range of motion. The system also includes an overhead instrument arm design providing surgeons anatomical access from most of the positions.

Intuitive Surgical’s robotic surgical systems came under fire in the past due to several incidents that raised doubts about the robotic surgical technology. Several reports have revealed that patients suffered complications or injuries owing to the robotic-assisted surgeries.

According to a study conducted by Johns Hopkins researchers and published in The Journal for Healthcare Quality in September last year, 174 injuries and 71 deaths were reported related to da Vinci system surgeries.

However, it seems that Intuitive Surgical is trying its best to promote robotic-assisted surgery as an alternative to conventional surgery. The company generates revenues from da Vinci systems as well as disposable instruments that are replaced after each procedure. da Vinci system uses robots, cameras and a remote-control console to perform gall bladder removals, hysterectomies, cardiovascular operations and prostatic surgeries.

Intuitive Surgical reported net earnings of $4.28 per share for the fourth quarter of 2013, which exceeded the Zacks Consensus Estimate by 49 cents as well as the year-ago earnings by 1%. However, net earnings went down 4.9% to $166.2 million in the fourth quarter.

Revenues in the quarter dipped 5% to $576 million but surpassed the Zacks Consensus Estimate of $551 million. The year-over-year decline was attributable to pressure on gynecology surgery, dispute related to some da Vinci procedures along with changing capital spending priorities in hospitals due to the implementation of the Affordable Care Act.

Currently, Intuitive Surgical retains a Zacks Rank #4 (Sell). Some better-ranked stocks in the medical instruments industry include Cynosure, Inc. (CYNO - Snapshot Report), Olympus Corporation (OCPNY) and Syneron Medical Ltd. (ELOS - Snapshot Report). All of them sport a Zacks Rank #1 (Strong Buy).
 

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