I last wrote about Asensus Surgical (NYSEAMERICAN:ASXC) stock was when it was still known as TransEnterix.
At the time, the company’s stock was caught up in the Reddit trade, but I suggested that ASXC stock has a story that many other meme stocks don’t possess.
Asensus Surgical also lacks something that some of the meme stocks did have: Significant revenue. Until that narrative changes, ASXC is a poor value at any price.
That doesn’t necessarily mean you shouldn’t invest in the stock, but given that ASXC stock is overvalued, investors may be waiting a long time for the stock to meet its lofty expectations.
ASXC Stock and the Future of Laparoscopy
Asensus Surgical changed its name to make a closer tie-in to its first-of-its-kind digital laparoscopic platform, the Senseus Surgical System. This is the company’s initial foray into the category that Asensus terms performance-guided surgery.
The goal of performance-guided surgery is to improve surgical results and, by extension, patient outcomes. In its latest investor presentation, Asensus cited the fact that one in every five surgery patients had one or more complications.
When a surgery patient has a complication, the hospital makes little to no money from that surgery.
That creates a clear reason for why doctors and hospitals would be interested in the Senhance system. The system uses augmented intelligence to “provide unmatched performance and patient outcomes through machine learning.”
Asensus is attempting to focus on a specific niche, digital laparoscopy that is untapped in the arena of digital surgery. By itself, this field is expected to have approximately 16 million procedures by 2030.
Revenue Has a Chance to Grow
The company is having some success. The Senhance system is currently in use by more than 100 surgeons across three continents. The system also assisted in over 4,000 procedures across a variety of surgical specialties, and that’s just scratching the surface.
The company itself says that the Senhance system could be used in over 2.7 million general surgical procedures.
Here’s where I’ll give a nod to an article by Will Ashworth that crunched the revenue numbers. As Ashworth points out, Asensus had $3.1 million in 2020 revenue. So for 1,450 procedures, it averaged $2,138 per procedure.
Robotic surgery only comprises about 5% of total surgeries. That means all Asensus will need is a small percentage of this market to generate significantly higher revenue.
But it has to prove that it can deliver the revenue. Until it does, ASXC stock remains very overvalued.
Is There a Price to Pay for ASXC Stock?
Asensus Surgical, regardless of what name it has operated under, is not a young company. To be fair, the company’s stock didn’t fall into penny stock territory until late in 2019. Throw in a global pandemic that effectively canceled many non-emergency surgeries and you can see why ASXC stock has struggled.
With that in mind, I can understand the reason why retail investors are interested in Asensus Surgical, believing its revenue picture is likely to improve.
The mere fact that things should get better doesn’t mean that the stock is a good value. Still, I understand the idea that at around $3 per share, an investor’s stimulus dollars go a lot further, but the stock is only getting the attention of one analyst.
That confirms that it isn’t exciting institutional investors who hold only about 4% of the company’s stock.
If you have a taste for the robotic surgery sector, I’d suggest keeping your position in ASXC stock small, and supplement it with a larger position in the established sector leader, Intuitive Surgical (NASDAQ:ISRG).
The company’s stock price has increased nearly 260% in the last five years. For even less risk, consider investing in one of the many exchange-traded funds that specialize in the sector such as the Global X Robotics & Artificial Intelligence Thematic ETF (NASDAQ:BOTZ).
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.