Shares of Transenterix (NYSE:TRXC) had a great year so far, surging over 200%. However, BTIG’s Sean Lavin believes the run-up has not been accompanied by any new fundamental catalysts or de-risking events around commercialization. As such, the analyst downgrades TRXC from Buy to Neutral, while keeping his price target at $3.50, which implies a potential downside of 40% from current levels.
Transenterix shares reacted to the downgrade, falling nearly 9% in pre-market trading Thursday.
Lavin commented, “At this higher price level, we see more risk around earnings […] investors may be expecting strong near-term beats. Senhance is in the early days of its US launch and while we see encouraging signs for system adoption, we also know that capital equipment sales can be lumpy from quarter to quarter.”
“We want to emphasize we do not have new concerns about the company’s prospects. We remain disciplined on valuation, but do like the Senhance technology and believe the system should enjoy solid adoption in a fast-growing segment of the medtech market. That said, the revenue multiple has increased significantly,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Sean Lavin has a yearly average return of 16.1% and a 63% success rate. Lavin has a 91.9% average return when recommending TRXC, and is ranked #201 out of 4825 analysts.
TipRanks indicates Wall Street is evenly split between the bulls and the fence sitters on this surgical robot maker. Out of 4 analysts polled in the last 3 months, 2 are bullish on Transenterix stock, while 2 remain sidelined on the stock. Yet, the 12-month average price target of $4.33 reflects a downside potential of nearly 26% from where the stock is currently trading.
TransEnterix is a medical device company that is digitizing the interface between the surgeon and the patient to improve minimally invasive surgery by addressing the clinical and economic challenges associated with current laparoscopic and robotic options in today’s value-based healthcare environment. The Company is focused on the commercialization of the Senhance™ Surgical System, which digitizes laparoscopic minimally invasive surgery.