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PROCEPT BioRobotics (PRCT) is back in focus after a class action lawsuit filed in federal court alleged the company used undisclosed discount programs that inflated sales metrics and contributed to excess inventory.
See our latest analysis for PROCEPT BioRobotics.
At a latest share price of $17.69, PROCEPT BioRobotics has seen a 1-day share price return of 5.99%, although the 30-day share price return is down 21.59% and the year-to-date share price return is down 42.49%. The 1-year total shareholder return is down 67.29% and the 3-year total shareholder return is down 48.64%. This indicates that pressure has been building over time as repeated guidance changes and now the class action have contributed to a weaker share price trend.
If this legal setback has you reassessing the sector, it may be a good moment to scan for other robotics and automation opportunities through the 34 robotics and automation stocks .
Bulls see a beaten down US$949.98m surgical robotics company with growing revenue. Bears point to legal risk, inventory questions and heavy losses. Does the current valuation look more like a reset opportunity or a value trap?
Most Popular Narrative: 30% Undervalued
Against a last close of $17.69, the most followed narrative on PROCEPT BioRobotics sees fair value at $25.26, built on a detailed revenue and margin story.
I have been an investor in PRCT since before IPO. The recent fluctuations in share price make no sense. The sell side analyst who chased the share price up to highs in 2024 (when the price was, in my view, too frothy) are doing the same thing now by revising the share price lower and lower, when the company is still executing well. The recent downgrade by Leerink, citing PAE as a possible headwind for PRCT growth, conflicts with what Larry Wood (CEO) stated at the last earnings call. To quote Larry Wood, "I don't think PAE is a headwind for us at all. I think PAE is a big red herring. It's a procedure that really does not get performed in any volume in Europe. And the reason it doesn't get performed is because it doesn't get paid for because it's not a very good procedure." Based on that view, the company appears oversold and looks very cheap at current levels. If PRCT hits the Q2 numbers, some investors expect that many will revise their target prices higher again. One view of fair value is still up at $47. PRCT had a reassessment of how to report handpiece sales versus procedures and therefore there was a shortfall on revenue. Under the old model, reported revenue would have been higher. Larry is aiming to make reporting a direct reflection of procedures being done. If the numbers are delivered, some investors expect a strong share price reaction.
Want to see what sits behind that $25.26 fair value for PROCEPT BioRobotics? The narrative leans on revenue expansion, a shift in profit margins and a future earnings multiple that assumes continued traction in urology robotics.
Result: Fair Value of $25.26 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, PROCEPT BioRobotics still faces meaningful risks, including the ongoing class action over discounting practices and uncertainty around the future reporting of procedures versus handpiece sales.
Find out about the key risks to this PROCEPT BioRobotics narrative.
Another View On PROCEPT BioRobotics Using Sales Multiples
That $25.26 fair value hinges on a detailed revenue and margin path. A simpler cross check uses the current P/S ratio of 3.1x. PROCEPT BioRobotics trades above the US Medical Equipment industry average of 2.8x, yet below a peer average of 5.1x and close to a fair ratio of 3.4x. This frames it as modestly cheap on this single measure rather than dramatically mispriced.
Investors who lean on this kind of comparison may see some room for upside if sentiment improves, but the gap is not huge, so this raises the question of how much weight it should really carry next to the legal and profitability considerations.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
Given the mix of concern and cautious optimism around PROCEPT BioRobotics, it makes sense to review the data yourself and decide promptly where you stand. To see how the balance of potential upside and downside looks in one place, review the 1 key reward and 1 important warning sign .
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include PRCT .
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