Stereotaxis Stock Forecast: Using robotic technology to assist in surgical procedures sounds like something from science fiction, but it’s happening today in hospitals all over the world.
Robotic systems offer a level of precision that simply isn’t possible for humans to match. Integrating that precision with the skill of a talented surgeon means greater accuracy, improved flexibility, and unsurpassed control during the procedure. That means better outcomes for highly complex operations, and in certain cases, the addition of robotics has made surgeries that were once unimaginable a reality.
Stereotaxis is an international leader in developing innovative robotic tools for the treatment of arrhythmias, with a goal of improving the safety and effectiveness of therapeutic interventions for this condition. Of course, investors want to know if the company is realizing financial benefits from its work. More to the point, is Stereotaxis stock a smart buy?
Healthcare + Robotics
The integration of robotics into healthcare has important advantages for patients, in addition to those already listed. These procedures are minimally invasive, which reduces the likelihood of complications.
There are fewer infections at the surgical site, and patients have less pain and blood loss. That means faster recovery, and a dramatic reduction in the size and visibility of scars.
Companies that specialize in developing robotics for medical use are exploring applications beyond those already in regular use. It is not uncommon to see robots engaged in surgeries related to kidneys, gall bladders, and prostates, and researchers are looking at employing these advanced tools in various cardio-thoracic procedures.
One of the most exciting areas of study is the use of robotics in the treatment of arrhythmia. This condition is marked by unusually rapid, irregular, and/or abnormal heart rhythms. If the issue is not corrected, more serious issues can result. For example, patients may develop ventricular fibrillation (VF) – the number one cause of heart attacks.
So where does Stereotaxis fit into this healthcare robotics revolution?
What Does Stereotaxis Do?
Stereotaxis is focused on designing robotic solutions to improve treatment of arrhythmia, and it is looking into other opportunities for integrating robotics in endovascular procedures.
In addition to the actual robotic technologies, Stereotaxis develops tools that collect and analyze data, giving physicians greater insight into individual patient needs.
Stereotaxis [NYSE: STXS] has already obtained regulatory approval for some of its robotic technologies in a lengthy list of countries.
Some of these include the United States, Japan, the European Union, Canada, and China. Already, more than a hundred hospitals offer therapies centered around Stereotaxis technologies, and over 100,000 patients have been treated.
World class medical professionals have endorsed the use of Stereotaxis tools with high praise. Examples of testimonials include the following:
- “With Stereotaxis, we are able to reach anywhere in the heart with more precision and safety.” – Dr. Charlie Young
- “With [Stereotaxis], we are able to address all types of arrhythmias – even those not suitable for conventional ablation – safely and effectively.” – Dr. Burkhard Huegl
Of course, from an investor perspective, testimonials aren’t quite enough to make Stereotaxis a buy, and the company has had a rocky relationship with the major exchanges.
It held its IPO in August 2004, and its listing on the Nasdaq was met with great fanfare. Many industry analysts pointed to Stereotaxis as the future of biotech. Unfortunately, in August 2016, the stock was delisted, as it no longer met the Nasdaq’s $35 million minimum market capitalization.
The stock then traded on the OTCQX until September 2019, when it joined the NYSE. Analysts quickly put their stamp of approval on the new listing with headlines like, “Stereotaxis is here to stay.”
So is Stereotaxis translating its success into profits? Is this stock a buy?
Is Stereotaxis A Buy?
Third quarter 2019 was a solid one for Stereotaxis [NYSE: STXS], with revenues totaling $8.2 million.
That’s a year over year increase of 9 percent when compared to third quarter 2018’s $7.6 million. The quarter’s revenue can be broken down into two categories:
- recurring revenue of $6.3 million and
- system revenue of $1.7 million.
The system revenue is credited to the company’s new robotic electrophysiology program.
Gross margin was consistent year over year at 78 percent of revenue. Specifically, third quarter 2019’s gross margin on recurring revenue was 85 percent, while gross margin on system revenue was 61 percent. There was a slight year over year increase in operating expenses from $6 million in 2018 to $6.4 million in 2019.
The best news to come out of Stereotaxis’ third quarter 2019 earnings report was a net income of $44,000. In the third quarter of 2018, that figure was in the red – a net loss of ($0.1) million.
It is also worth noting that as of September 30, 2019, the company had cash and cash equivalents of $31.7 million and no debt.
Management didn’t offer specifics in terms of financial projections for the upcoming quarter and expectations for 2020. They did indicate that they are optimistic that revenue growth will be “robust” in 2020, thanks to recent accomplishments and continuing innovation.
Clearly, Stereotaxis’ prospects are improving as evidenced by third quarter financials and the NYSE listing. Is that enough to make Stereotaxis stock a buy?
Stereotaxis Stock Forecast
The bottom line is that analysts aren’t willing to commit when it comes to recommending Stereotaxis – but they aren’t ready to suggest that current investors sell. Its rocky history has made the industry a bit skittish about the company.
At best, analysts suggest a wait-and-see strategy, holding onto current shares, but holding off on large new purchases until more information is in.
For biotech investors, it comes down to risk tolerance. Stereotaxis [NYSE: STXS] has a good product and impressive proprietary technology that has been proven effective. If the company isn’t able to generate profits on its own, chances are it will be acquired by a competing firm.
Certainly, this advanced technology isn’t going to be taken out of service until something better comes along to replace it. Share prices are low enough to take a risk for those who are so inclined, but more cautious investors may prefer one of these options:
- Medtronic – Maker of the Renaissance Guidance System, which allows surgeons the flexibility to move between freehand and guided surgical procedures
- ReWalk Robotics – Designs robotic exoskeletons that make it possible for people with impaired mobility to stand and walk
- Intuitive Surgical – Handles the manufacture of the da Vinci – the industry’s top robotic surgery system
Learn more about investing in medical technology from the experts at Financhill – where many of the world’s smartest investors go for information.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.