Shares of MAKO Surgical (MAKO +0.00%) rose more than 13% during Tuesday's trading after Wells Fargo analyst Larry Biegelsen upgraded the stock to "outperform" from "market perform." In addition, Biegelsen increased his price target on the stock to a range between $15 and $17 from his earlier target of $11 to $12 per share.
As it stands, and even after today's pop, this new range represents an upside of between 18% and 34% from MAKO's current price around $12.70 per share.
It's all in the hips
Remember, last October I noted that MAKO management had promised investors that their "hip 2.0 application upgrade" would be rolled out in either the third or fourth quarter of 2013. So, why did this matter?
At the time, surgeons had voiced concerns to MAKO over certain aspects of the RIO system's relatively young Total Hip Arthroplasty solution, which the company had only launched in September 2011. As Biegelsen noted with his upgrade, MAKO expects to address most of those concerns when the new hip software application is implemented in July. As a result, he states that the RIO robots "should be used for significantly more hip surgeries" going forward.
In fact, that's one of the very reasons I wrote just last week why MAKO could eventually quadruple as the company steadily increases the number of procedures performed using its robots.
Of course, it's also important to note while only 467 of the 2,988 procedures performed (or 15.6%) last quarter were hips, that still represented an 18.2% sequential increase over the previous quarter. In short, this shows that surgeons are already picking up the pace with MAKO-assisted hip replacements, despite the fact the hip 2.0 application hasn't even arrived yet.
Foolish final thoughts
However, considering that a full 65% of MAKO's 156 robots are currently equipped with the $150,000 hip add-on, there's still plenty of room for the company to boost hip procedures from current levels. This, in turn, will serve to improve MAKO's monthly per-site utilization numbers, which will only bring the company that much closer to its holy grail of sustained profitability.
When that happens, I'm convinced that long-term oriented MAKO shareholders will be rewarded handsomely for their patience.
