Asensus Surgical, Inc.

ASXC Details

Asensus Surgical, Inc. (NYSE: ASXC) is a medical device company digitizing the surgeon-patient interaction to usher in a new era of Performance-Guided Surgery by unlocking clinical intelligence to enable consistently improved results and a new surgical standard. The Senhance Surgical System, which digitizes laparoscopic minimally invasive surgery, is the company's primary emphasis for market development and commercialization. As of November 04, 2021, ASXC's market capitalization stood at USD 541.29 million.

Latest News:

• Geographical Expansion: ASXC announced on November 01, 2021, that the Shinmatsudo Central General Hospital in Matsudo, Japan, has agreed to lease and use the Senhance Surgical System. Previously, ASXC announced on October 06, 2021, that the Hirosaki University Hospital has decided to lease and operate the Senhance Surgical System.

9MFY21 Results:

• Boost in Revenues: ASXC witnessed a sharp uptick in its total revenue to USD 5.76 million during 9MFY21 (ended September 30, 2021) compared to USD 2.07 million during 9MFY20, due to a higher number of systems with maintenance agreements during the period.
• Slight Increase in Net Losses: The company recorded net losses of USD 46.58 million during 9MFY21 vs. USD 45.52 million during 9MFY20.
• Healthy Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents (including short-term investments) of USD 117.75 million and no outstanding debt.

Key Risks:

• Product Concentration Risk: Currently, Senhance Surgical Systems is ASXC's only product. As a result, any failure to commercialize this product might negatively influence the company's finances.
• Supplier Concentration Risk: AXSC's Senhance System has a single vendor for several raw materials and components, which might hinder its ability to build an effective supply chain and undermine its cash flows.

Outlook:

• Senhance Program Estimate: According to ASXC's Q3FY21 press release, the company expects to launch 10 to 12 new Senhance programs in FY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ASXC Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

ASXC's stock price has surged 479.82% in the past twelve months and is currently leaning towards the lower end of its 52-week range of USD 0.36 to USD 6.95. The stock is currently trading above its 50 and 100 DMA levels, and its RSI Index is at 73.16. We have valued the stock using the EV/Sales multiple-based relative valuation methodology and arrived at a target price of USD 1.90.

Considering the significant uptick in the stock price and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the closing price of USD 2.31, up 24.86% as of November 04, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and industry information have been taken from REFINITIV.  

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