Transenterix Inc (TRXC): Here's Why You Should Play It Safe – Smarter Analyst

Transenterix Inc (NYSE:TRXC) just delivered its fourth quarter print yesterday for 2017, leaving one analyst highlighting a promising beginning for 2018- albeit one that is simply premature to signal system sale waves forward as “sustainable” just yet.

The surgical robot maker’s earnings show indicate to BTIG analyst Sean Lavin an encouraging opening to the new year; yet, “we think it is too early to increase sales meaningfully and continue to expect lumpiness,” explains the analyst.

As such, the analyst reiterates a Neutral rating on TRXC stock without listing a price target. (To watch Levin’s track record, click here)

For the fourth quarter, TRXC hit $3.4 million in revenue, just ahead of the analyst’s and the Street’s expectations. Revenue marked not one, but two system sales during the quarter, with one in the U.S. and another outside the states.

Looking ahead to the first quarter of 2018, the healthcare player anticipates taking in stride a minimum of two systems outside the U.S., with the TRXC team acknowledging 3 system sales within the last 3 months. Beforehand, Lavin had not been forecasting any sales during the first quarter, so this is quite a positive from the analyst’s eyes.

In reaction, the analyst has modeled for two new OUS system sales to his first quarter estimates for 2018 while cutting one system from his third quarter expectations- leading to one extra estimated system for this year. Additionally, the analyst adds two systems each for next year as well as for 2020.

“We are cautious on significantly lifting sales, as we feel it is too early to call this momentum sustainable,” notes Lavin, who still bumps up his 2018 revenue projection from $9.1 to $11.8 million and 2019 revenue from $13.9 to $18.6 million.

“TRXC has grown its US team and now has 17 people working to sell Senhance systems. In the US, the company is focused on IDNs, community-based hospitals, centers with high volumes of general and gyn surgeries, and teaching hospitals. In the EMEA region, TRXC is planning to work with distributors, but will stay direct in high-value markets. Asia Pac, which has a tendency toward early adoption of new technology, remains a good future opportunity,” writes Levin regarding a rise in TRXC’s salesforce.

On a final note, the analyst concludes acknowledging that indication expansion and new instruments seem to be right “on track” for the company: “TRXC expects additional Senhance 510(k) indications for gallbladder and inguinal hernia by mid-2018. The 3 mm instrument, which some surgeons call ‘scarless surgical robotics,’ is particularly well-suited for gyn and hernia procedures and is anticipated by end of year. The adv. energy platform and 5 mm articulating instruments remain on schedule.”

TipRanks shows cautious, yet positive analyst sentiment floating over Transenterix shares. Out of 3 analysts polled in the last 3 months, only 1 is bullish on the healthcare stock, with 2 hedging their bets on the sidelines. However, notably, the 12-month average price target stands at $4.00, reflecting an encouraging almost 113% upside potential from where the stock is currently trading.

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