The robots are coming.
An unprecedented surge in the volume and flow of data in the 2010s (90% of the world’s data was produced in the past two years) has enabled machine learning and artificial intelligence models to take huge leaps forward in terms of capability and robustness.
This has coupled with significant advancements in tech hardware production, and ultimately brought us on the cusp of creating a new generation of advanced robots that can think and act like humans.
The Robot Revolution is starting.
This is a big deal.
Robots will inevitably be able to replicate and automate a widespread number of human tasks. They will do those tasks more efficiently than humans (robots don’t get tired), with greater accuracy (robots remove human error), and at a lower cost (robots don’t need salaries).
It should be no surprise, then, that the World Economic Forum predicts that 52% of current job tasks will be performed by robots by 2025.
Nor should be it any surprise that Tractica sees the global robotics market more than doubling between now and 2025.
The Robot Revolution is starting, and it’s going to unlock significant economic value.
Today, we will give you an explosive way to play the Robot Revolution. It’s by buying a micro-cap robot stock that – despite a history of false starts – is ready to finally come into its own, and surge 15X higher amid the Robot Revolution of the 2020s.
Using Robotics to Help People Walk Again
Those who follow the robotics space are likely familiar with ReWalk Robotics (NASDAQ:RWLK).
The $35 million Massachusetts-based tech company is a pioneer in the robotic exoskeleton market, making robotic machines that leverage a series of advanced motors to enable disabled persons with spinal injuries to walk again.
It’s truly an amazing thing that this company does. Just Google “ReWalk Robotics story” and see for yourself. You’ll find article after article detailing multiple stories of how ReWalk’s technology has helped people who never thought they could walk again, actually walk again.
It’s really heartwarming stuff.
But the “heartwarming” part of ReWalk Robotics ends when you look at the stock chart. Over the past five years, ReWalk stock has lost about 99% of its value.
What’s the deal?
ReWalk’s assisted walking machines work. There’s no doubt about it. Every testimonial you find is a positive one. And they are the unparalleled leader in this market.
But… ReWalk’s assisted walking machines are also very, very expensive. Most folks can’t afford them. So, in order to buy a ReWalk machine, they need help from insurance companies.
These insurance companies have thus far failed to provide that help.
Insurance companies are all about numbers. They’ll cover treatments if it makes financial sense for them to do so.
The argument ReWalk has tried to make several times over the past few years is that folks with severe spinal injuries have enormous medical costs over their lifetime because they aren’t getting up and walking – and that by enabling them to do just that, ReWalk’s machines eradicate those medical costs and actually save money in the long-term.
But ReWalk’s machines are relatively new. And there aren’t many of them in circulation. So, there has been a dearth of data to prove this point – and in the absence of data-backed proof, insurance companies have passed on providing coverage.
That’s all changing right now.
ReWalk has collected tons of pre-injury and post-exoskeleton data from its machines in use over the past six years. All of this data is starting to paint a verifiable picture that, indeed, ReWalk’s expensive machines result in lifetime medical cost savings.
The result? Insurance companies are starting to provide coverage for ReWalk.
The first domino is falling in Germany, where ReWalk has won five insurance contracts over the past few quarters (with another two being negotiated), including a first-ever agreement with a private health insurance company announced in December 2020.
The U.S. is following closely behind. In July of 2020, ReWalk was issued an HCPCS code – or a standardized code attached to ReWalk’s treatment which helps facilitate the processing of health insurance claims by Medicare and other third-party insurance providers in the U.S.
That’s a huge deal, because HCPCS codes are a prerequisite for coverage. Thus, by being issued a HCPCS code, ReWalk is putting itself in a great position to start winning coverage contracts in the U.S. much like it has been doing in Germany.
Big picture: ReWalk’s biggest headwind over the past five years – a lack of insurance coverage – is finally starting to abate.
As it does abate, ReWalk’s life-changing machines will start to become more accessible to the general public, and the company will sprint into hypergrowth mode, selling tons of machines to now-medically-covered spinal-injury victims across the U.S. and Germany.
What does all this mean for beaten-up ReWalk stock?
Huge gains ahead.
Management pegs the addressable market of applicable patients in Germany and the U.S. at about $3 billion. A 3% market penetration rate on that implies $90 million in annual revenue. Assuming ~20% operating margins and a 20% tax rate, that could easily flow in $15 million in net profits.
Robotics peer iRobot has historically averaged a 35X forward earnings multiple over the past five years. A 35X multiple on $15 million in net profits implies a hypothetical future valuation target for ReWalk of $525 million – up 15X from today’s market cap.
So… if you’re looking to boost your portfolio with some exposure to the Robotics Revolution, you should consider taking a position in ReWalk stock today.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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