UPDATE 3-Intuitive Surgical profit far exceeds expectations

* Q4 EPS $1.95 vs Street estimates of $1.71

* Revenue up 40 percent to $323 million

* Shares up 7.7 percent in after-hours trading (Adds outlook, da Vinci details, analyst comment, background, updates shares)

By Bill Berkrot

NEW YORK, Jan 21 (Reuters) - Intuitive Surgical Inc (ISRG.O) reported far better-than-expected fourth-quarter results on Thursday, with profit up more than 50 percent on increased demand for its da Vinci surgical robot systems and higher instruments and accessories sales.

For 2010, Intuitive expects revenue to grow by 25 percent with procedures growing by 35 percent over 2009 levels. Total revenue in 2009 was $1.05 billion.

"The outlook is quite positive for Intuitive," said Les Funtleyder, analyst for Miller Tabak & Co.

"Twenty-five percent revenue growth is nothing to sneeze at," Funtleyder said, adding that he believes based on past history that the forecast is likely a conservative one.

Intuitive said fourth-quarter net profit rose to $77.6 million, or $1.95 per share, from $50.8 million, or $1.27 per share, a year ago.

That exceeded analysts' average expectation by a whopping 24 cents a share, according to Thomson Reuters I/B/E/S.

Revenue jumped 40 percent to $323 million, topping Wall Street estimates of $292.7 million.

Canaccord Adams analyst Jason Mills called it "another fantastic quarter."

"I am continually surprised at the upside this company has continued to produce in a relatively tough market," Mills said.

"They not only beat on procedure volume, but they beat on system revenue," Mills said, but he added that the Intuitive stock valuation makes it difficult to recommend.

Intuitive shares, which have more than tripled in the past 10 months, rose 7.7 percent to $328 in extended trading from their Nasdaq close at $304.49.

Instruments and accessories revenue climbed 39 percent in the quarter to $113.3 million, driven by 44 percent growth in da Vinci procedures. The average revenue per procedure was $1,960, the company said.

Systems revenue jumped 42 percent to $162 million, while service revenue increased 32 percent to $47.8 million.

Sunnyvale, California-based Intuitive sold 110 da Vinci systems in the quarter, up from 85 a year ago. Of those 110, 87 were the newer, more expensive model, with 23 trade-ins of the standard older model.

And more hospitals are buying second and third systems, the company said, with the Cleveland Clinic recently purchasing five new da Vincis.

"Hospitals doing high volumes are justifying new machines and that's driving the revenue," Mills said.

The motr expensive da Vinci systems, which cost about $1.4 million each, are most often used in delicate procedures, such as hysterectomies and prostate surgery. Their use has been associated with significantly shortened hospital stays and fewer surgical complications.

In total, 1,395 da Vinci systems are now in use worldwide, the company said.

The da Vinci robot system recently won approval in Japan, which is expected to become a lucrative new revenue source for Intuitive. But the company cautioned that success in Japan will come slowly and it declined to speculate on when it will get clearance for reimbursement of da Vinci procedures there.

Funtleyder said he expects Japanese revenue to become a factor in 2011.

"When it does kick in, it's going to be big," he said. (Reporting by Bill Berkrot. Editing by Robert MacMillan, Leslie Gevirtz)