TransEnterix (NYSEMKT:TRXC), a robotic surgery company, saw its shares gain an astounding 111% in May, according to S&P Global Market Intelligence. The medical device company's stock took flight for three solid reasons last month:
- Early in the month, TransEnterix announced that it had sold a total of five of its newly approved Senhance Surgical Systems since the beginning of 2018. Wall Street, by contrast, was expecting a far more sluggish launch for the device due to the entrenched nature of Intuitive Surgical's market-share leading da Vinci system.
- This better-than-expected commercial launch for the company's robotic surgery platform also caught the eye of RBC Capital analyst Glenn Novarro last month. Specifically, Novarro noted toward the end of May that Senhance's sales should continue to pick up steam going forward, thanks to the rapidly growing demand for robotic surgery platforms across the board.
- Finally, TransEnterix announced positive regulatory news near the end of May that also positively impacted the company's share price. In particular, the Food and Drug Administration reportedly cleared the Senhance system for both laparoscopic inguinal hernia and laparoscopic cholecystectomy surgeries, which should roughly double the device's addressable market.
TransEnterix might be stepping into this emerging space at almost the perfect time. The robotic surgery market, after all, is forecast to become one of the fastest-growing areas in all of healthcare over the next six years, according to a report by Allied Market Research.
With these key regulatory hurdles finally in the rearview mirror, TransEnterix appears primed to continue its upward trajectory. That being said, the market has definitely taken notice of the company's good fortunes of late.
TransEnterix's stock, for instance, is now trading at an unseemly forward-looking price-to-sales ratio of nearly 14. That's well above the industry average that tends to hover around 5 from a historical standpoint, implying that this small-cap healthcare stock is overpriced by a wide margin right now. It might therefore be a good idea to wait for a pullback from these recent highs before buying shares.