TransEnterix (TRXC 4.42, +0.06, +1.48%) opened higher today after the company
guided second quarter revenue above estimates this morning.
TransEnterix is a medical device company that focuses on commercializing the Senhance Surgical System, which digitizes laparoscopic minimally invasive surgeries in order to improve surgeons’ control and minimize surgical variability. The system allows for robotic precision, haptic feedback, surgeon camera control via eye sensing, and improved ergonomics while providing responsible economic value. In the U.S., Senhance is now cleared for laparoscopic colorectal, gynecologic, inguinal hernia, and cholecystectomy surgeries.
TranEnterix sold four Senhance Systems in the second quarter, including one in June (announced this morning) to an end user hospital through a distributor in the Company's EMEA (Europe, Middle East, and Africa) region. That brings the total for the year so far to six Senhance Systems.
TransEntrix guided for second quarter revenue of $6.0-6.3 mln, 13% above estimates, representing 310% year/year growth at the midpoint.
TRXC is up almost 200% since the company reported first quarter results in early May.
TransEnterix has a market capitalization of roughly $900 mln, which means the stock trades at ~35x sales estimates for the year. Sales are expected to grow well over 200% in 2018, but that is still a very demanding valuation -- a 10-15x sales multiple is generally considered expensive.
The phenomenal success of robotic surgery giant Intuitive Surgical (ISRG) may be adding to enthusiasm around shares of TransEnterix. Intuitive Surgical's da Vinci Surgical System became the first robotic surgical platform cleared by the FDA for use in general laparoscopic surgery in 2000. Intuitive Surgical now has a market value of $54 bln while ISRG's stock has risen to $478/share from the single digits (split-adjusted).
TransEnterix's frothy valuation has attracted short sellers: some 16% of the float is sold short.
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