Investors Should Pass On Unreliable Asensus Surgical

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Investors who are interested in medical device companies should look to more stable equities than Asensus Surgical (NYSEAMERICAN:ASXC) stock.

ASXC stock surgeons operating on a patient
Source: Dmytro Zinkevych / Shutterstock.com

Durham, North Carolina-based Asensus Surgical makes robotic medical devices used in surgical procedures. Sold in the U.S., Europe and Asia, Asensus’ products include a robotic surgery system that allows up to four arms to control robotic instruments and a camera during surgical procedures, and also a robotic laparoscopic surgical platform.

The company also designs and manufactures surgical instruments and ultrasound equipment for use in hospitals. And Asensus is involved in machine learning and hopes to apply the technology to its various medical innovations.

This is all advanced technology that is making surgery more exact and efficient. Currently a penny stock, Asensus Surgical has seen its share price rise 281% year-to-date, growing to $3.43 from just 90 cents in January.

While it seems, on the surface, to be moving in the right direction, investors should take a close look at Asensus Surgical, founded in 2006, to determine if it can find long-term success with its medical devices.

Name Change and Re-brand

Asensus Surgical has only recently operated under that moniker and logo. The company was known as TransEnterix until February, when it underwent a name change and major re-brand. The company says it undertook the re-brand to emphasize its surgical devices and technology.

The change, which also included a new ticker symbol, does not seem to have had a significant impact on ASXC stock, either positively or negatively. The share price has retreated 36% since the re-brand but appears to be mostly due to the broad rotation out of technology stocks.

However, some observers have scoffed at the name change and new logo, claiming that they are merely window dressing and meant to distract from the fact that the company continues to struggle financially and with the sales of its medical devices. To be sure, Asensus Surgical only generated $3.2 million of revenue in 2020. The company has forecast that its revenue will climb to about $7.5 million by 2022.

The same critics point out that Asensus Surgical’s laparoscopic robot has been around for more than a decade and failed to catch on with the surgeons it is marketed to.

Going forward, Asensus Surgical needs to revitalize its product line if it hopes to find meaningful success, say analysts. A new name, logo and ticker symbol alone are unlikely to turn the company’s fortunes around.

A Meme Stock

Much of the run-up in ASXC stock this year has been caused by retail investors on Reddit who targeted Asensus Surgical along with other so called “meme stocks” in January and February. These investors, who operate with a herd mentality, piled into Asensus Surgical’s stock and pushed the price to a 52-week high of $6.95 in mid-February.

There had been no significant announcements from the company earlier this year, other than the re-branding, to justify the stock’s surge. Certainly, the company’s earnings would not have moved the share price higher.

The Reddit investors pushed the market capitalization of Asensus Surgical close to $1 billion, an astronomical valuation given the small company’s meager revenues. Many investors have abandoned ASXC stock in recent weeks, cutting the stock price in half to its current level of nearly $3.50 a share.

Can the stock find support at its current level and move higher again, or will it continue to steadily decline?

News earlier in March that Asensus Surgical’s Intelligent Surgical Unit received approval from the U.S. Food and Drug Administration to be used in general surgery is positive. But it remains to be seen if that FDA approval will translate into sales. Or if doctors and surgeons want to employ the Intelligent Surgical Unit at the hospitals where they work.

Avoid ASXC Stock

Asensus Surgical remains an interesting company with weak revenue whose technology, while advanced, has failed to make a meaningful impact. As a result, ASXC stock continues to trade under the $5 threshold that designates it as a penny stock.

The stock’s rise this year has been impressive. But it has been due almost entirely due to speculative interest from retail investors who have effectively orchestrated a pump and dump on the shares.

Investors should remember that there are many other medical device stocks that they can buy, including Medtronic (NYSE:MDT), Abbot Laboratories (NYSE:ABT) and Boston Scientific (NYSE:BSX). These companies are much more established and stable than Asensus Surgical and can provide consistent, reliable returns.

While the moves up in the stocks of these more mature medical device companies might not be as dramatic as with Asensus Surgical’s stock, the drops aren’t as dramatic either. ASXC stock is a pass. Avoid it.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


Article printed from InvestorPlace Media, https://investorplace.com/2021/03/investors-should-pass-on-unreliable-asxc-stock/.

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