Microbot Medical (NASDAQ:MBOT) is soaring 51% after an agreement with Stryker (NYSE:SYK) was announced. The companies plan to collaborate to develop the first robotic procedural kits for certain neurovascular procedures. The news was drastic for MBOT stock and we’re not even into the afternoon session yet.
Shares opened higher by 71.4% and rallied as much as 77% shortly after the open. The stock has already traded more than 61 million shares this morning. Given its average trading volume of just under 50,000 shares a day, Monday’s rally really puts things in perspective.
A Big Positive for MBOT Stock
Why is this news such a positive for MBOT stock? Because Microbot Medical is a pre-clinical medical device company, we’re also talking about a pre-revenue business. Those businesses are incredibly difficult to value, as there is a lot of potential, but not a lot of underlying financial strength.
Partnering with Stryker doesn’t change the situation overnight, necessarily. However, it does bring a heaping scoop of credibility to Microbot Medical’s robotic system. Hopefully the financial implications will follow.
While Stryker will integrate Microbot’s robotic system with its instruments, Microbot will “continue to develop the Liberty system independently for use in peripheral and coronary procedures.”
Chairman, President and CEO Harel Gadot said, “We have already ensured that the LIBERTY Robotic System has a strong and sustainable competitive advantage, and the collaboration with Stryker will allow us to further expand in the neurovascular space.”
Further, Gadot believes “…the similarities in our innovation culture, as well as our complementary core capabilities will allow us to establish a truly differentiated solution that will benefit all stakeholders and accelerate our goal of changing the way robotic surgery is viewed and adopted.”
A Deeper Look at Microbot Medical
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Despite the huge rally and robust volume, MBOT stock has yet to hit new 52-week highs. That would have required a move over $10.69, a level it hit on Feb. 16.
Now investors are left wondering how this rally will be interpreted by Wall Street. Will investors sell the news and drive MBOT stock lower or will they embrace the news and keep the stock elevated?
As it stands now, shares are back above all of their key daily moving averages. However, a dip below $7.15 changes that, as that’s where the 200-day moving average currently is.
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On the date of publication, Bret Kenwell 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.
Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.
