PROCEPT BioRobotics Corp: Utilization Hits an Eddy. Neutral at $20.

Research evidence excerpt

PROCEPT BioRobotics Corp: Utilization Hits an Eddy. Neutral at $20.

alanced at current levels and believe investors Q2E (0.36) (0.44) NM (0.46)

should await clearer signs of utilization acceleration, likely tied to clinical or site-of-care Q3E (0.37) (0.34) NM (0.34)

expansion catalysts. In the interim, we remain on the sidelines as the company Q4E (0.29) (0.26) NM (0.18)

restructures its salesforce strategy to focus on driving organic utilization growth. 12/26E (1.51) (1.60) NM (1.54)

12/27E (0.76) (0.93) NM (0.89)

What Could Change Our View 12/28E 0.71 (0.75) NM (0.60)

We see three primary catalysts that could drive a renewed utilization inflection over time: Patrick Wood

1) FDA approval of a prostate cancer indication; 2) Higher adoption in the ambulatory Analyst

surgery center (ASC) setting, which remains underpenetrated today; 3) incremental patrick.wood@ubs.com

expansion into the estimated 1.1 million patients currently managed with +1-212-713 3018

pharmaceutical therapies, often referred to as “pharma fallouts,” who may ultimately Priya Sachdeva

require procedural intervention. On the downside, we would monitor continued share Analyst

loss to other modalities and further reimbursement compression. priya.sachdeva@ubs.com

+1-212-713 4193

Valuation: $20 PT, Neutral Jayna Francis

We apply a ~2x EV/Sales multiple to our Q5E-Q8E sales to arrive at our $20 PT, which Associate Analyst

jayna.francis@ubs.comimplies PRCT continues trading at current levels and a discount to the MedTech SMID-

+1-212-713 4939

Cap average (~3x EV/Sales). We believe the stock could re-rate to the SMID-Cap average

contingent on evidence of accelerating utilization, but for now we stay on the sidelines.

Highlights (US$k) 12/23 12/24 12/25 12/26E 12/27E 12/28E 12/29E 12/30E