Jan. 30, 2019 1:03 PM ET
New STXS management is experienced and has major skin in the game, with insiders owning 67% of the outstanding shares.
STXS is finally unburdened by debt and has enough cash to reach consistent profitability.
STXS has a large installed base of machines in hospitals worldwide that is generating about $7 million per quarter in recurring revenue at an 80% margin.
STXS is a no-brainer bolt-on acquisition for many robotic surgery companies,with its superior and patented robotic technology, and a high-margin razor/razor-blade business.
A Highly Undervalued Company In A Hot Market For Acquisitions Creates A Rare Opportunity
Stereotaxis (STXS) has developed an innovative magnetic robotic surgery system for repairing heart arrhythmias and other heart conditions. Extensive data shows that STXS’s robotic magnetic navigation (RMN) system is arguably better and safer than traditional laparoscopic methods, and hundreds of physicians have used the system over 100,000times in some of the finest hospitals worldwide. With the STXS system, the success rate is higher, the rate of injury is lower, and the market for cardiac ablation surgery is growing for treating this heart condition, one that can be very serious and lead to heart attacks, strokes and death.
In fact, by 2020, the radio-frequency (RF) cardiac ablation market is expected to bring in $4.2 Billion, and the total market for RF ablation is predicted to be $10.6 Billion, with a CAGR of 12.1%. Very recent acquisitions in the robotic surgery space and STXS’s position as the leading player in RMN surgery should bring renewed attention to STXS, especially as STXS brings in over $28 Million in recurring revenue on a yearly basis at an 80% gross margin and is now completely debt-free.
After reviewing STXS’s recent management actions, industry trends, and balance sheet, I believe that STXS is worth at least 3 to 5 times its current stock price. This valuation is based on the valuation of robotic surgery peers, and recent takeovers of other robotic surgery companies.
The CEO of STXS stated in the most recent quarterly conference call: “The market opportunity remains very significant for new robotic ablation practices as the cardiac ablation market is among the largest and most rapidly growing medical device market with significant long-term tailwinds.”