The more regular readers out there will know that here at Insider Financial, one stock that we come back to pretty regularly is Ekso Bionics Holdings, Inc. (NASDAQ:EKSO).
The reason we come back to it frequently is that it’s one of those plays that has the potential to be a real long-term winner but, for a variety of reasons, hasn’t yet picked up the break it needs to undergo a sustainable (and supportable, from a fundamental perspective) upside revaluation.
One of the primary reasons for this is that the company is trying to essentially create a brand-new industry and, in turn, trying to sell its lead technology into the industry it has created.
This is a big ask for even the largest of companies but, for a company with the market valuation of the capital resources of Ekso, is a constant uphill battle. This far from negates its possibility, however, and we have long hypothesized that it is only going to take one bit of good fortune and a subsequent upside break to draw a whole host of speculative capital towards the stock and really get things moving towards a sustainable recapitalization.
At the end of last week, we got what we were looking for.
On November 10, 2017, Ekso announced that it has teamed up with automaker and industrial behemoth Ford Motor Company (NYSE:F) as part of a collaboration that will see the latter trial its proprietary technology with a view to implementing the system across its network of manufacturing and distribution plants in the US.
For those new to Ekso, the company is a technology stock that has developed an exoskeleton that, initially, picked up approval as a device that could help to improve the recovery time and quality for patients who have suffered spinal injuries and/or strokes. Over the last twelve months, however, and on top of its healthcare iteration of the technology, Ekso has also developed a version of the exoskeleton designed to make heavy lifting easier in an industrial environment.
The system, called EksoVest, is designed to be worn by people between the height of 5 feet 6 feet four inches and can provide between 5 pounds and 15 pounds of lifting support to each of the wearer’s arms.
That’s a considerable difference for an individual who spends his or her day lifting items, and especially for those that work above the head, and expectations are this EksoVest technology can reduce fatigue in workers as well as potentially reduce the number of workplace injuries associated with frequent heavy lifting.
So what comes next?
As of the initial collaboration, EksoVest is being trialed at two of Ford’s manufacturing plants. If the trial runs smoothly (as determined by the reaction to the technology from the workers that are using it on a daily basis in the two trial facilities) then expectations are that Ford will rollout EksoVest across its manufacturing network in the US.
What we are looking for, therefore, is some indication that the trial is running smoothly and – subsequently – that Ford Is going to take it on long-term.
What about risks?
The real risk here is two-fold.
First, that the Ford collaboration won’t come to anything. That’s a risk but, given some early stage feedback from the users at the trial plants, it’s a small one. Companies like Ford want to reduce workplace fatigue as much as possible and if there’s any indication that the EksoVest can do this, to however small a degree, we think there’s a good chance that Ekso can score a long-term contract.
The second risk (and the bigger one, in our eyes, is capital burn. There was $33.4 million on hand at the end of September but, when you’re trying to create your own industry, that’s not an awful lot.
As such, we might see some degree of dilution, especially if the company has to ramp up to meet the demands of a national rollout.
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Image courtesy of Mike Mozart via Flickr
Disclosure: We have no position in EKSO and have not been compensated for this article.