ReWalk Robotics (NASDAQ:RWLK) is a penny stock that has experienced some large pops in its share price this year, seemingly precipitated by the Reddit stock crowd. But RWLK stock has more going for it than some other meme stocks and may offer an opportunity for long-term investors based on the company’s fundamentals.
Shares, which ended 2020 at $1.32, soared to a high of $6 on Feb. 12, for a gain of more than 350% in a matter of weeks. That’s when the Reddit-fueled short squeeze chatter was in full effect. Somehow, I doubt that’s a coincidence.
There was a similar yet smaller run-up in RWLK stock in September. Shares shot up more than 100% in less than a week, going from $1.30 to $2.78, following frequent mentions on social media.
Unfortunately, both of those pops were followed by sharp drops, as is typically the case with meme-driven rallies. But prospective investors should dig deeper into what ReWalk Robotics does and whether the company is capable of generating strong revenue growth.
The good news is that ReWalk’s position in the medical community is firm and the company’s fiscal picture looks bright. At the end of the day, the company could be proof positive that a small business can truly make a big difference.
ReWalk Targets High-Need Markets
To simply call Rewalk Robotics a medical device firm doesn’t really do it justice. The aptly named company makes robotic devices that enable people with mobility impairments or other medical conditions to stand and walk again.
The company’s investor presentation clarifies ReWalk’s target markets, which are bigger than you might expect:
- Spinal cord injury: 291,000 patients in the United States with 17,730 new cases annually
- Stroke: 27.6 million stroke survivors in the United States, Europe and China combined
- Knee osteoarthritis: 10% of the population over 60 and up to 40% of the population over 70
- Multiple sclerosis: 1 million diagnoses in the United States and 2.3 million worldwide
- Parkinson’s disease: 10 million patients worldwide
ReWalk Robotics’ devices include the Personal 6.0 Exoskeleton, a wearable exoskeleton with motors at the hip and knee joints, that’s meant for people with spinal cord injuries and similar mobility issues. There’s also the ReStore Soft Exo-Suit, which is intended to help rehabilitate individuals with lower limb disability following a stroke. Rewalk’s MYOLYN FES System facilitates home exercise via an electrical stimulation system, and MediTouch promotes rehabilitation through sensing biofeedback.
Checking the Fiscal Picture
Clearly, ReWalk seeks to achieve innovator status in the medical robotics community. Prospective investors, however, will surely want to know whether all of this adds up to a fiscally strong business. Thankfully, the answer is a clear “yes.”
According to the company’s second-quarter financial results, which were released in August, ReWalk Robotics generated $1.4 million in revenue. This was the company’s fourth consecutive quarter of sequential revenue growth. So, ReWalk’s moving in the right direction in that regard.
Gross margin declined to 51% during the second quarter, down from 61% a year ago, which management said was due to a changing sales mix and service costs. But it remains in line with the industry average. What’s more, the company’s cash position of $64.2 million at the quarter’s end indicates ReWalk is on solid financial footing.
In the press release accompanying the announcement, ReWalk Robotics CEO Larry Jasinski said, “The second-quarter results reflect the ongoing reopening of the markets. We are now able to trial many new individuals who had been waiting and filled our pipeline during the pandemic.”
He added that he is encouraged by the company’s “focus on achieving broader coverage in Europe and the United States.”
The Bottom Line on RWLK Stock
It’s fine to put RWLK stock on your potential short squeeze watch list. Yet, there’s more to the story here. This is not your typical medical device business. ReWalk is an innovator operating within a vast addressable market that has shown it can generate consistent revenues.
Investors ready to take a chance on ReWalk Robotics could see huge gains. With shares currently trading around $1.30, a move up to the $2.50 to $3 level could double your money or more.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets