Although technologies involving connectivity platforms are all the rage these days, innovations in healthcare and medicine are finally starting to come to the forefront as novel coronavirus cases gradually decline in the U.S. Among t2he hottest in this sector is Transenterix (NYSEAMERICAN:TRXC), a specialist in minimally invasive surgery (MIS). On a year-to-date basis, TRXC stock gained a blistering 720%.
Naturally, speculators want to know if shares still have further room to run.
Fundamentally, the narrative is incredibly appealing. Transenterix focuses on a segment of MIS called laparoscopy, which is an operation performed via small incisions with the aid of a specialized camera. However, the company goes a step further than the competition, leveraging advanced optics and sensory technologies, superior equipment ergonomics for surgeons and next-generation robotics that function with precision and accuracy.
It’s really no wonder why TRXC stock has garnered so much attention. One look at its laparoscopy solution in action and you’ll be tempted to load up the boat, considering that shares are priced below $5 a pop at time of writing.
As alluded to earlier, the timing is seemingly just right for TRXC stock. During the surges in Covid-19 cases, many hospitals delayed surgical procedures. And these backlogs didn’t exclusively consist of elective surgeries — many critical ones also experienced delays. But now that the novel coronavirus appears to be under control, the non-pandemic-related healthcare divisions can slowly return to normal.
Furthermore, TRXC stock represents much-needed solutions across the board. On the operating table, MIS utilizes smaller incisions and is therefore less risky than traditional surgeries. Also, such advanced operations require shorter and fewer hospital stays. For the patient, MIS innovations can be lifesaving both literally and financially.
According to Healthcare.gov, the “average cost of a three-day hospital stay is around $30,000.” You get a bill like that — assuming you don’t have health insurance — you’re going to spend a long time paying back that procedure.
Only Speculators Need Apply for TRXC Stock
Interestingly, while the above estimate for a three-day hospital stay might seem over the top, it may be an understatement. From another source, Debt.org, a single hospital stay can average nearly $16,000. Thus, there’s every incentive to minimize such costs, which bolsters the fundamental argument for TRXC stock.
Plus, with everyone still reeling from the pandemic, no wants to stay in a health facility longer than they need to. Again, this should lift TRXC stock. So, why the hesitation among some to consider this groundbreaking opportunity?
Primarily, Transenterix was a penny stock not too long ago. Up until the end of last year, shares traded for less than a buck. But beginning in 2021, TRXC went into beast mode. This is due to encouraging developments, in particular European regulatory approval for the company’s Intelligent Surgical Unit, which provides augmented-intelligence solutions for MIS procedures.
Nevertheless, it’s difficult to not get at least a little bit concerned about bag holding. Although I’m not suggesting that TRXC is a meme stock, it has the qualities of one — namely, an equity unit with a cheap price and a large following.
In the runup, these trades appeal because of their cult-like experience. Wherever you turn, people are making money and buying Lambos. But eventually, prices collapse and not necessarily because of short traders. Many if not most of the time, it’s the anonymous colleagues on these social media platforms that were egging everybody else on while they were dumping out.
It’s perhaps the biggest form of disassociation we have in society today, the belief that you have friends on Wall Street. You don’t. You never did.
And that’s what worries me about TRXC stock. It wasn’t that appealing of a business until the world went crazy.
Know What You’re Getting Yourself Into
Still, I can appreciate why people are betting on TRXC stock. A similar company, Intuitive Surgical (NASDAQ:ISRG), also started off as a cheaply priced security. Today, ISRG is slowly approaching four-digit territory.
However, Intuitive Surgical is an established business, generating strong revenue growth until the novel coronavirus disrupted everything. Further, the company is very profitable. While Transenterix has the potential to replicate some of Intuitive’s success, there’s no guarantee that it will.
Ultimately, if you want to speculate, you should do so with a small holding. Just keep in mind that TRXC stock appears to be in the middle of forming a bearish head-and-shoulders pattern. If that does turn out to be the case, you’re extra incentivized to keep the powder keg dry.
For everyone else, you may want to sit on the sidelines. There’s just too much craziness baked into the market for these longshots.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.