Could Transenterix (TRXC) Boost Its Total Addressable Market Double by the End of 2018? RBC Capital Shares Key Insights

RBC Capital's Glen Novarro walks away upbeat on TRXC's market opportunity following an encouraging non-deal roadshow with CFO Joe Slattery.


RBC Capital analyst Glenn Novarro is out with bullish insights on Transenterix Inc (NYSE:TRXC) after hosting a non-deal roadshow (NDR) with the surgical robot maker’s CFO Joe Slattery. Considering penetration of the robotic market continues to be “low,” there is a big space for various contenders to enter the arena; especially this biotech player. In fact, Novarro emerges from meetings with management increasingly upbeat that robotics adoption in the U.S. is on the rise, pinpointing hernia as the growth driver present-day of U.S. robotic procedure.

Sizing up power for TRXC to magnetize further share in an “underpenetrated market,” the analyst reiterates an Outperform, Speculative Risk rating on the stock with a $5 price target, which implies a close to 48% upside from current levels. (To watch Novarro’s track record, click here)

“Management expressed how the Senhance launch is gaining momentum and how TRXC has potential to double its TAM by year-end,” cheers Novarro, who commends the TRXC management team for continuing to knock it out of the park on commitments for this year. After all, just in the second quarter of this year, the company has hit three Senhance system sales, achieving Novarro’s expectations. For the year, the analyst bets TRXC can sell 14 Senhance systems, 5 in the U.S. and 9 internationally.

“This gives us confidence that the Senhance launch is gaining momentum and we believe there is potential room for additional upside in 2Q […] As of now, we are not updating our 2Q18 or 2018 estimates, but we walked away from our day with TRXC’s CFO confident that the company will hit our estimates for 2018,” adds the analyst.

Moreover, Novarro underscores, “[…] we estimate that less than 10% of surgeries in the US are done robotically. On a global basis, ~60% of surgical procedures are still done via an open fashion, leaving plenty of runway for both laparoscopy and robotic surgical adoption. This is key, as Senhance robotic surgery closely resembles laparoscopic surgery. Overall, we continue to believe that the WW commercial opportunity for robotics remains huge, with room for multiple players. We don’t expect another entrant into the WW market until 2019 at the earliest.”

Glancing ahead, with potential new indications in hernia and gall bladder, should the FDA grant approval, the company’s total addressable market could circle back over double its current amount. While the company currently handles around 1.5 million procedures each year, this could jump to roughly 3.5 million procedures annually. Additionally, the biotech player is intent on winning a nod for its 3mm instruments, which have a CE mark green light in Europe and the analyst angles for an FDA victory by the close of this year. Moving forward, the TRXC management team anticipates an advance energy device launch in Europe this year, angling for a 510 (k) clearance submission by the close of 2018.

TipRanks showcases largely positive sentiment from sell-side analysts betting on TRXC stock. Out of 5 analysts polled in the last 3 months, 4 are bullish on TRXC stock with 1 sidelined on the biotech stock. With a return potential of nearly 26%, the stock’s consensus target price stands at $4.25.

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