New Position: Long-Term Compounder in Surgical Robotics

Cheap valuation and best-in-class margins

We view the company as appealing in the short term, given its low earnings multiple and recent strong Q2 earnings.

However, we believe it is also a strong long-term compounder with solid fundamentals, and our goal is to hold the company for 5+ years.

The company is already generating revenue with surgical robots, but it is still a small percentage, and we believe the stock can do very well without surgical robotics. Given the low valuation (11x earnings, below peers and below historical valuation), we think this is an optionality, making the situation “asymmetric.”

Outside of surgical robots, the medical technology company is an established leader in spinal implants with best-in-class margins.

Further, healthcare sentiment has been shifting. Since the pandemic, performance of healthcare equities has been poor, with almost no gain since 2019.

However, in recent months we have seen a growing interest in healthcare, given that growth is proving to be strong and investors are looking to move away from AI uncertainty.

Whether AI booms or busts, you still need surgical tools.

Earnings are inflecting, margins are expanding, and the stock still trades cheap. We also provide expert calls with executives from the company.

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Table of Contents

1. Why Now?

2. Company Overview

3. Industry Landscape

4. Expert Calls

5. Financials

6. The Acquisition Strategy

7. Surgical Robots Theme

8. Valuation

9. Risks

10. Conclusion

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