Asensus Surgical Inc

Asensus Surgical Inc (AMEX: ASXC) is a medical device manufacturer. It is digitizing the interface between the patients and surgeons by unlocking opportunities in the Performance-Guided Surgery era.

The Company has rescheduled its annual meeting of stockholders on 22 July 2021.

Investment Highlights – SPECULATIVE BUY at USD 2.79

• ASXC has boosted its liquidity through equity financings. As of 31 March 2021, the Company had nearly US$166.4 million in cash, cash equivalents and restricted cash.
• The Company has witnessed strong procedure volume trends, received FDA clearance for general surgery, and submitted for 510(k) clearance for articulating instruments.
• From a technical standpoint, 14-day RSI (44.74) is in the oversold territory, while the stock price is hovering close to the lower standard deviation of the Bolling Bands.
• Over the past year, ASXC has yielded a positive ~705% of return, significantly higher than the benchmark, the NYSE American index.

Key Risks

• The entrants in the surgical robotics market can negatively impact the commercial opportunity.
• There are operational uncertainties associated with the Covid-19 pandemic, which can impact its clinical test and commercialization capabilities.
• The Company has limited financial resources due to lack of profitability, and growth trajectory is dependent on external funding at right time on acceptable terms.

Recent Developments

28 June 2021: ASXC announced its Senhance® Surgical System program has been initiated by Inselspital, University Hospital Bern, Switzerland.

Q1 FY21 Financial Highlights (for three months ended 31 March 2021, as of 11 May 2021)

 (Source: Company Website)

• ASXC signed two lease agreements to install Senhance® Surgical Systems with hospitals.
• It also received 510(k) clearance for general surgery indication, and CE Mark for the Intelligent Surgical Unit™.
• During Q1 FY21, revenue grew over three times, while the net was slightly higher than the Q1 FY20.

One Year Share Price Chart

 (Analysis done by Kalkine Group)

Conclusion

ASXC has delivered a remarkable return of ~705% in the past year, and presently trading slightly below the 52-week mid-level.  The stock seems bullish post CE Mark approval for its Senhance Surgical System and other recent developments. In Japan, it has achieved regulatory approval and reimbursement for 98 laparoscopic procedures. Moreover, the Company has decent liquidity and strong technology pipeline to generate value for its shareholders. The stock made a 52-week low and high of USD 6.95 and USD 0.30, respectively. The next important support level on the technical chart is at USD 2.40.

Based on the strong revenue growth, enhanced liquidity, lease agreements, expanded 510(k) clearance for general surgery indication, we have given a "SPECULATIVE BUY" stance on Asensus Surgical Inc at the current market price of USD 2.79 (as of 2 July at 11:50 AM ET).

Retractable Technologies Inc

Incorporated in 1994, Retractable Technologies Inc (AMEX: RVP) manufactures and markets syringes and other safety medical products for the health care industry.

Investment Highlights – SPECULATIVE BUY at USD 11.96

• Domestic sales jumped by 484.7% year-on-year in Q1 FY21 due to increased volume from the US government.
• High sales volume and per unit pricing, increased the gross profit by 41.8% in Q1 FY21 versus Q1 FY20. Subsequently, the Company reported an operating income of US$481 thousand in Q1 FY21 from an operating loss of US$175 thousand in Q1 FY20.
• To the Series II preferred shareholders, the Company paid a cash dividend of US$39,050 in April 2021.
• The cash balance (as on 31 March 2021) comprised 22.3% of total assets, driven by increased accounts receivables.
• Over the past year, RVP has yielded a positive ~73.5% return, significantly higher than the benchmark, the NYSE American index.
• From the technical standpoint, RVP’s price is trading above the 20-day EMA (USD 11.33) showing bullish momentum, while the 14-day RSI is still showing a neutral strength at ~57.35 level.

Key Risks

• RVP’s business is vulnerable to new technologies, which can reduce the need for its products.
• In FY20, 85.25% of its products were manufactured in China. Any unfavourable change in foreign trade policy can significantly impact its supply chain.

Recent News

Share Buyback: On 7 June 2021, RVP announced the adoption of a repurchase plan for up to $10 million of its Common Stock.

Q1 FY21 Financial Highlights (for three months ended 31 March 2021, as of 17 May 2021)

 (Source: Company website)

• RVP reported an operating income of US$23.4 million in Q1 FY21 against the operating income of merely US$481 thousand in Q1 FY20, reflecting a substantial growth in revenue.
• The domestic sales to the US government represented 97.3% to the total revenues in Q1 FY21. Therefore, increased volume from the US government driven the significant rise in sales.
• Due to increase in units sold, the cost of manufacturing surged 181% year-on-year.

Share Price Chart

 (Analysis done by Kalkine Group)

Conclusion

RVP has demonstrated a stellar revenue growth in Q1 FY21, with improvement in bottom-line items of the income statement and better liquidity. It underpins bright Company prospects. Moreover, the Company has also received additional funding of US$27,365,232 for increasing its existing domestic manufacturing capabilities to meet the ongoing COVID-19 medical countermeasures demands. The resurgence of coronavirus cases shall support the demand for its products in the short-term. The stock made a 52-week High and Low of USD 21.50 and USD 5.26, respectively. On the technical chart, the next important support level is at USD 9.66.

Based on the robust revenue growth, improved financials, enhanced liquidity with additional funding from the US government, favourable market dynamics, we have given a "SPECULATIVE BUY" stance on Retractable Technologies Inc at the current market price of USD 11.96 (as of 2 July 2021 at 10:30 AM ET).  

*All forecasted figures and Industry Information have been taken from REFINITIV.

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

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached or if the price closes below the support level (indicative stop-loss price).

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.