PROCEPT BioRobotics (PRCT), What Is Driving The Fresh Attention?

A recent lawsuit targeting PROCEPT BioRobotics (PRCT) alleges that a discount program encouraged bulk orders, which inflated reported U.S. handpiece sales and masked operational and financial risks. The case is putting the company’s disclosure practices under a sharper investor spotlight.

At a share price of $18.22, PROCEPT BioRobotics has seen short term momentum soften, with a 30 day share price return down 14.06% and a year to date share price return down 40.77%, while the 1 year total shareholder return has fallen 47.54% as legal scrutiny feeds into perceptions of risk around the business model and disclosures.

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PROCEPT BioRobotics now trades well below where many analysts peg its value, yet intrinsic estimates signal only a modest gap. After the lawsuit driven slide, which reference point deserves more weight for you?

Most Popular Narrative: 28% Undervalued

Against the current $18.22 share price, the leading narrative on PROCEPT BioRobotics argues for a much higher fair value at $25.26, putting recent legal headlines up against a bullish view on long term fundamentals.

I have been an investor in PRCT since before IPO. The wild fluctuations in share price recently make no sense. The sell side analyst who chased the share price up to highs in 2024 (when the price was way too frothy) are doing the same thing now by revising the share price lower and lower, when clearly the company is still doing a great job. The recent downgrade by Leerink, citing PAE as a possible headwind for PRCT growth, is in direct opposition to 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.” So if you believe Larry Wood, then the company has been grossly oversold and looks very very cheap down here. If PRCT hit the Q2 numbers watch all the sheep suddenly revise their target prices back up again. I think 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. Clearly they could have stuck with the old model and revenue would have been better. Larry is doing a great job of making reporting a direct reflection of procedures being done. If the numbers are delivered, watch this thing fly.

See why 6 investors see PROCEPT BioRobotics as 28% undervalued.

Result: Fair Value of $25.26 (UNDERVALUED)

Still, PROCEPT BioRobotics faces real pressure if lawsuit findings hurt hospital buying behavior or if procedure and system adoption slows relative to recent expectations.

Find out about the key risks to this PROCEPT BioRobotics narrative.

Another View: SWS DCF Model Puts PROCEPT BioRobotics In A Different Light

The bullish fair value of $25.26 for PROCEPT BioRobotics runs into a very different conclusion when using the SWS DCF model. On this framework, PRCT at $18.22 is trading above an estimated future cash flow value of $16.70, which leans toward overvaluation rather than a bargain. Which signal carries more weight for you: a cash flow lens or a narrative driven target?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out PROCEPT BioRobotics for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 31 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Mixed signals around PROCEPT BioRobotics can be confusing, so consider this a prompt to act quickly: review the underlying numbers and narrative, then weigh 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.

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