Asensus Surgical, Inc.

ASXC Details

Asensus Surgical, Inc. (NYSE: ASXC) is a medical device company dedicated to digitizing the surgeon-patient interaction to usher in a new era of Performance-Guided Surgery by unlocking clinical knowledge and enabling consistently superior results and a new surgical norm. The Senhance Surgical System, a machine vision system for use in robotic surgery powered by an intelligent surgical unit that enables augmented intelligence in surgery, is the focus of ASXC's market development and commercialization efforts.

Global Acceptance of the Senhance Surgical System: ASXC announced that it signed two separate agreements on October 06, 2021, and September 29, 2021, with Japan's Hirosaki University Hospital and Sapporo Medical University Hospital, respectively, for the leasing and utilization of its Senhance Surgical System. This follows September 27, 2021 news stating that the Loginov Moscow Clinical Scientific Center in Moscow has purchased, installed and commenced the Senhance Robotic Surgery program, which would be the first-ever use of the Senhance System in Russia.

Q2FY21 Results: The company reported a 68.24% increase in total revenues to USD 1.10 million in Q2FY21 (ended June 30, 2021) compared to USD 0.66 million in Q2FY20, primarily due to a higher number of lease and systems maintenance arrangements and increased instruments and accessories sales. Net loss for the company (attributable to common shareholders) reduced to USD 13.17 million in Q2FY21 vs. USD 14.14 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents of USD 157.08 million and no outstanding debt.

Key Risks: ASXC currently has a single product offering, i.e., Senhance Surgical Systems. Therefore, any failure in the commercialization of these systems could adversely impact its financials. Moreover, some of the raw materials and components for AXSC's production requirements are sourced from a single vendor, which could hamper its ability to create an efficient supply chain and harm its business.

Outlook: In its Q2FY21 earnings release, ASXC stated that it plans to install 10 – 12 new Senhance Surgical Systems in FY21. It also intends to publish various clinical papers in peer-reviewed publications showcasing the health and economic outcomes comparing Senhance, robotics, and laparoscopy in General Surgery and Gynecology in a range of procedures, specialties, and facilities.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ASXC Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: ASXC's stock price decreased 21.28% in the past three months and is currently leaning towards the lower end of its 52-week range of USD 0.35 to USD 6.95. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 47.52. We have valued the stock using the EV/Sales multiple-based relative valuation methodology and arrived at a target price of USD 2.35. Considering the significant correction in the stock price, strong balance sheet, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 1.85, up 2.78% as of October 14, 2021, 11:54 AM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.