BTIG Turns Neutral On TransEnterix, Says Stock Rally Unsupported By Fundamentals

Transenterix Inc TRXC shares have spiked 50 percent in the last week, 71 percent in the last month and 734 percent in the last year.

But one analyst senses diminishing momentum.

The Rating

BTIG analyst Sean Lavin downgraded TransEnterix to Neutral and withdrew his price target.

The Thesis

By Lavin’s assessment, the pop in price reflects no fundamental improvements or risk alleviation around commercialization. He attributes the rise to a long-expected indication expansion, the stock’s addition to the Russell 2000 index, a break beyond the $1-billion market cap or general investor sentiment. (See the analyst's track record here.) 

The unjustified increase may bear or reflect expectations of strong quarterly beats, which gives rise to earnings risk, the analyst said. 

“Senhance is in the early days of its U.S. launch, and while we see encouraging signs for system adoption, we also know that capital equipment sales can be lumpy from quarter to quarter." 

BTIG forecast little room for upside given current revenue expectations, although it has no concerns about the company's overall prospects. 

“We continue to like the company’s fundamentals and still view recent Senhance sales momentum, positive international developments and sustained rapid growth in the overall robotic market as pluses for TRXC,” Lavin said. 

Price Action

TransEnterix shares were falling 8.9 percent to $5.32 at the time of publication midday Thursday.

Related Links:

A New Short Report Claims Transenterix's Senhance System Is A 'Commercial Flop'

How Surgeons Are Responding To TransEnterix's Senhance Following FDA Approval

Photo courtesy of TransEnterix. 

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