Getting a Pulse on Profit
Tonight marks the beginning of a new series on Mad Money. In the interest of finding the next big thing, Cramer will highlight one medical delivery stock during each show this week. Hansen Medical – not to be confused with the beverage company – gets the first look.
Believe it or not, this stock is actually defensive. Why? Because right now the hottest part of the market is non-pharma health care because it is immunized from subprime, and that’s where HNSN lines. The company is losing money hand-over-fist, it has no revenues, but Cramer thinks it’s going to be huge.
Hansen Medical makes a robotic catheter system, called Sensei, that makes it a whole lot easier for doctors to precisely control the movement of the catheter tube. Most catheters in use today are manual, so doctors need to push and pull the tubes themselves – very messy. Better to have a robot do all the precise operations. The company’s targeting irregular heartbeat patients, of whom there are about 5.5 million in the U.S.A.
Here’s the drawback: The Sensei machine hasn’t been approved yet in the EU or the U.S., but it should be approved in Europe during the first half of the year, and here in the U.S. during the second half. Hansen will charge around $625,00 per machine and sell the disposable bits for roughly $1,600 per procedure, which should create a nice recurring sales base.
Their only competitor here is a company called Stereotaxis that already has its device on the market with a much higher price point and a partnership with the brothers Johnson. Would a monopoly be better? You bet it would. But we’ll live with a duopoly, and so can Hansen Medical – over all their machine is better than the STXS machine, and it costs less.
Now here’s the best part of the story: HNSN was founded by the co-founders of Intuitive Surgical. If you don’t recognize the name, go look up its five-year chart. These guys have a track record. Hansen Medical is slated to start turning a profit in its eighth year of business, and that’s exactly what ISRG did, too, with another automated surgical robot.
Bottom Line: Don’t jump all over this stock. Be careful. If you’re going to buy, use tight limit orders, and it’s best to wait for a couple of days before buying. Come back all week for more stocks just like Hansen.
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