TransEnterix (NYSEARCA:TRXC), which is a medical devices company, announced this week that it will change its corporate name to Asensus Surgical, but there’s no telling how much that will matter to TRXC stock in the long term.
The name change was aimed at better reflecting the company’s focus on cutting-edge technologies like computer vision and machine learning for robotic surgeries (“sensus” is Latin for “cognition” and the “A” is for “augmented intelligence).
Yet the move did not gin up much interest in TRXC sock (by the way, the ticker will change to ASXC on March 5). The shares were off 16.64%.
But of course, the markets have been choppy lately – especially for hot growth companies. Besides, TRXC stock has already had a powerful run from $1.17 to $4.60 for the year so far.
Then what now? Is the recent a drop a good entry point? Or should investors hold off?
Let’s take a look.
A Closer Look at TRXC Stock
Founded in 2006, TransEnterix is focused on developing medical devices for minimally invasive surgery. The company calls its approach “digital laparoscopy.”
One of the hallmarks of the system is the use of machine vision. This is highly-sophisticated technology that relies on artificial intelligence (AI), which helps in detecting patterns in large datasets.
The platform, which is called the Senhance Surgical System, has features like eye-tracking for the camera system, 3D visualizations and haptic feedback. There is also the capability to use small instruments (at 3 millimeters).
The market is certainly massive, and it’s a market that is only growing. According to TransEnterix’s own research, the spending on abdominal robotic surgery is expected to go from $3.7 billion this year to $16 billion by 2023.
The Issues With TransEnterix Stock
Progress for TransEnterix has been fairly slow. For 2020, the company estimates that revenues will range from $3 million to $3.2 million, compared to $8.5 million in 2020 and $24.1 million in 2018. No doubt, Covid-19 pandemic has definitely had an adverse impact on the company as there have been fewer medical procedures.
However, there are other nagging issues for TransEnterix. The fact is that the market is highly competitive, with mega rivals like Intuitive Surgical (NASDAQ:ISRG) and Medtronic (NYSE:MDT).
What’s more, the sales cycles are protracted because the Senhance System is a major capital expense. Although, the company has been relying on approaches like leases to lesson the financial burden.
Bottom Line on TRXC
TransEnterix’s platform has compelling advantages, such as the AI system. For example, the company has recently been granted a CE Mark in Europe for the augmented technology. There is also likely to be the approval of an FDA 510K, which should help boost sales.
“The innovative machine vision based camera controlled features that were recently introduced enables the system to recognize certain objects and locations in the surgical field,” CEO Anthony Fernando said on the most recent earnings call.
He went on to say that ease of use and efficient camera control could reduce technology-related surgical mistakes.
Fernando also touted the benefits of fully reusable instruments and improved seat positioning for the system.
The company has also been smart to focus on niche market opportunities. This has allowed it to get some traction with customers (the Senhance System has handled over 4,000 surgeries).
But despite all this, it is not clear how much growth there will be — at least in the short-run. If anything, there will be a need for more investments in sales and marketing.
Thus, for the time being, it’s probably best to take a wait-and-see approach on this one. Again, this is a tough market to generate momentum, especially in light of the long sales cycles and heavy costs.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. He is also the author of courses on topics like the Python language and COBOL.
