GIVN ISRG STXS (numbers at the end of words refer to footnotes and dots are used for spacing in the table)
I am interested (and invested) in a company called Stereotaxis1. Some friends have told me they think it has an interesting product, NIOBE2 which will, in time be successful.
Stereotaxis makes claims for the NIOBE system that could drive its success if proven in the hospital setting, namely:
- enabling cardiovascular interventions3 that previously could not be done;
- reducing the time for procedures;
- making procedure timing more predictable, improving efficiency;
- reducing radiation exposure to the physician.
Goldman, Sachs brought Stereotaxis to market, with the company selling 5.5M shares on August 11, 2004 at $8.00 per share. An additional 462,352 shares were sold September 3, 2004 pursuant to the option granted GS to sell up to 825,000. GS was not able to sell as many shares as planned nor did the offering bring the hoped for pricing range $14-16.
To examine the valuation that the market is giving STXS, I took a look at two device companies that are further along in their growth and market history, GIVN and ISRG4. (See table) ISRG is the most like STXS, selling a similarly priced surgery tool. Recurring revenue for supporting "da Vinci" is impressive at 46% in the most recent quarter. Recurring revenue for STXS is much lower at 6% MRQ. This negative may be a function of STXS being newer in the market. Each NIOBE sale at $850K brings in recurring revenues of $100K per year. As more units are placed the share of revenues represented by recurring revenues should grow. GIVN5 seems to issue very scanty financials6, rather surprising to me, considering the high valuation the market places on it.
In a recent CC for STXS's 3Q earnings7 the company indicated that backlog was about $20M, up from $19.2M in 2Q. 3Q and 4Q tend to be the best booking Q's and booked sales tend to be delivered over the ensuing 8 months, suggesting about $2.5M monthly revenue run rate. Absent a pickup in bookings these run rates might not be sustained and the stock could come under some pressure over the next couple of quarters.
Values in the table come from Yahoo and news releases available as of November 13, 2004.
.......................GIVN.....ISRG...STXS
Share price $ ......29.94......31.99....10.5
Revenue $M .........55.3 .....121.......28
MC $M ..............823.......1090......280
EV $M ..............756.......967.......257
GM% ................48.8%.....34.4%.....52.0%
EBITDA $M ..........1.73 .....15.4 .....-26
EV/REV .............13.7......7.98.......10
EV/EBITDA ..........436 ......62.6 ......N/M
MRQ YOY Rev Increase 50% ......52%......470%
MRQ GM% ............UNK.......64.0%.....52.6%
MRQ Recurring Rev/Tot Rev % UNK 46%......60%
Product price $K ..............880.......850
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1 Home page: stereotaxis.com
2 stereotaxis.com
3 One physician described being able to place a stent using NIOBE where the placement required making a 140° turn and then a 170° turn to navigate to the site. He indicated that he taught cardiology, had done over 3,000 cath lab procedures but would not have been able to do this without the NIOBE system.
4 ISRG's da Vinci Surgical System has already survived competition when MUSE failed leaving no one to support the unique equipment sold to hospitals ? leaving hospitals a bit gun-shy. intuitivesurgical.com
5 givenimaging.com
6 biz.yahoo.com
7 phx.corporate-ir.net |
