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On January 3, we upgraded medical devices company, Intuitive Surgical (ISRG - Analyst Report), to Outperform based on its improved prospects. Intuitive, a pioneer in robotic surgery, became a Zacks #1 Rank (Strong Buy) stock on the back of rising estimates following strong third-quarter results.

Why the Upgrade?

Third quarter 2012 loss came in at $4.46, well above the Zacks Consensus Estimate of $3.48 per share. Revenues increased 20% from the year-ago period to $537.8 million, easily surpassing the Zacks Consensus Estimate of $535.0 million. Over the past four quarters, Intuitive has delivered an average surprise of 14.45%.

Following the release of third quarter results, the Zacks Consensus Estimate went up 0.3% to $14.85 per share. Moreover, the Zacks Consensus Estimate for 2013 increased 0.5% to $17.50 per share.

Intuitive Surgical’s da Vinci Si Surgical System is expected to capture a sizeable share in the minimally invasive surgery market over the next few years. Moreover, the company is experiencing rising sales in the international markets based on increasing worldwide adoption of robotic procedures. It also enjoys a virtual monopoly in robotic surgery with little competition.

Other Stocks to Consider

Besides Intuitive Surgical, other stocks in the medical sector that are currently performing well include Myriad Genetics Inc. (MYGN - Analyst Report) and Cantel Medical Corp. . All these companies carry a Zacks #1 Rank (Strong Buy).

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