Would Warren Buffett Buy Intuitive Surgical Stock?

As the maker of the da Vinci robotic surgery suite, Intuitive Surgical (NASDAQ: ISRG) doesn't fit the mold of a traditional Warren Buffett stock. The company needs to spend a significant portion of its revenues on research and development (R&D) in order to stay competitive. Its selling, general, and administrative (SG&A) costs are also quite high -- both of which would be red flags for Buffett. While it isn't the only robotic surgery company, Intuitive's market capitalization of around $88 billion makes it by far the largest, meaning that it may need to maintain or accelerate its pace of innovation to prevent smaller competitors from stealing its market share.

But, thanks to the company's customers in hospitals who need maintenance and replacement parts to use their da Vinci robotic surgery machines, Intuitive does have a substantial competitive moat. Furthermore, though its earnings and revenue growth haven't been consistently positive, the company is profitable, cash-rich, and debt-free, all of which are traditionally favored by Buffett.

Could Intuitive be a new type of Buffett stock for the 21st century, blending high-tech development with locked-in customers and a strong competitive position in a growing industry?

Source Fool.com