The Rise Of The Robots: Mazor Robotics And Intuitive Surgical

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Capital Screen
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Summary

  • The robotic surgery market grows at 12.6% CAGR.
  • We estimate that Mazor Robotics has 100% upside over the next 5 years based on our NPV model and sales forecast.
  • We believe that Intuitive Surgical is too expensive right now. Long term, we think that it may be a good investment.

The robotic surgery market is growing fast at 12.6% CAGR. The most well known growth story is Intuitive Surgical (ISRG). This company was practically unknown till 15 years ago and today it is the world's leading robotic surgery solution provider with over $2b in annual revenues.

Intuitive Surgical

At first we wanted to buy Intuitive Surgical. However, its price-to-earnings (P/E) ratio is 45 and the annual growth is just around 6%. We find it too expensive right now. We think that the revenue growth should be much higher to justify the current share price at $506.

Figure 1. (Source)

We think that Intuitive Surgical is a great company. Their da Vinci equipment has been used in 1.5m surgeries worldwide.

What other robotic surgery companies could we then consider? In this article, we will talk about Mazor Robotics (MZOR).

Mazor Robotics

Mazor Robotics is still quite unknown to a large audience, like Intuitive Surgical was 15 years ago.

Mazor Robotics is an Israel-based company with over 140 employees.

Its computerized and imaging-based surgical guidance system called Renaissance focuses on two key markets:

  • Spinal surgery for thoracic lumbar. There are 360,000 thoracic lumbar operations each year in the US alone.
  • Brain surgery with the same equipment.

Please note that Mazor Robotics' Renaissance system has obtained FDA approval and CE-marking. It is being commercialized in the US, Europe, Russia, Far East Asia and Asia Pacific.

Let's have a look on the installed base and revenue growth:

Installed Base

Figure 2. (Source)

Revenue Graph

Figure 3. (Source is same as for Fig. 2)

Net Present Value Assumptions - Mazor Robotics

Now many investors could ask the question: is Mazor Robotics a good investment opportunity?

We have analyzed the potential revenue growth based on the total market size.

The key assumptions are:

  • Thoracic lumbar surgery market size is $1.1b

This article was written by

Capital Screen profile picture
346 Followers
I am passionate about investing since 15 years already... and would like to share a couple of ideas with my readers. I have an engineering background (PhD) and have worked in the industry bringing billions of dollars of manufacturing facilities up from the ground mainly holding a strategic/commercial role. Please do your own research and due diligence prior to investing your own money. Good luck!

Disclosure: The author is long MZOR, TRXC. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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