Nexstim OYJ (NXTMH-FI): 2018: An exciting year ahead

goetzpartners securities Limited

05-March-2018 / 09:35 GMT/BST

Free to access research in a post-MiFID2 world

Nexstim OYJ (NXTMH-FI): 2018: An exciting year ahead
Recommendation: OUTPERFORM
Target Price: EUR1.23 (increased from EUR0.93)
Current Price: EUR0.20 (cob on 2nd March 2018)


We reiterate our OUTPERFORM recommendation on Nexstim and ahead of what is likely to be an exciting year of news flow, we increase our target price to EUR1.23 (from EUR0.93). We believe the risk reward relationship is very lucrative – the company is on the way to developing a new therapy platform of NBT system with appealing recurring revenue. Recent FDA approval for depression reduces the risks as the platform is not solely based on stroke rehabilitation anymore.

Nexstim is a Finnish medtech company with game changing technology for targeting transcranial magnetic stimulation (“TMS”) treatment in the brain.

NBT, a platform for profitable growth: The company initially validated the company with NBS (Navigated Brain Stimulation), used for pre-surgical mapping of the motor cortex. NBT (Navigated Brain Therapy) uses the same technology in therapy of various neurological and psychiatric indications. The NBT equipment is intended to be used for multiple indications including stroke rehabilitation, depression and neurological pain. The growth drivers are the number of outstanding units and their utilisation rate where multiple indications for the same unit are the key. With the profit margins on the consumables exceeding 80%, Nexstim’s business model will combine high profit margins with stickiness of customers.

Risk-reward situation improving further: Since our initiation note (22nd May 2017), the company has improved their cash situation by raising more finance and received the FDA approval for NBT system in depression treatment. The key uncertainly remains the same – the outcome of the stroke trial E-FIT in Q3/2018 – but with the patient enrolment complete and the FDA approval for depression de-risking the device, the risk-reward situation has improved further in our view.

FY2017 sales were slightly below our expectations (EUR2.6m vs. EUR3.0m) while the loss was smaller than we expected (EBIT EUR-5,6m vs. EUR-6.3m). Gross margin expansion was stronger and personnel cost reduction larger than we expected. The company guides for a larger loss in 2018, which we already expected.

Launch in depression will start driving the growth in Q2/2018, but there is uncertainty on the pricing model Nexstim will use. It is possible that the NBT business will move into specialised centres that will use the units for multiple indications, leading to more uniform pricing of consumables and services per unit. Our current model is based on unit sales plus recurring consumable sales, but it is possible Nexstim will move to monthly invoicing. This would not have an impact on the long-term value, we believe, but may affect the timing of the sales growth.

We provide an update on the expected dilution. Investors should note that the current market cap does not reflect the eventual dilution – see chart 13 for details.

In our view, the company has executed an impressive turnaround and the current market cap is clearly too low for a promising medtech company like Nexstim. Based on our DCF valuation we set our new target price at EUR1.23 (increased from EUR0.93) and reiterate our OUTPERFORM recommendation.

Click here for full PDF version

Kind regards,

goetzpartners Corporate Research | Research Team

goetzpartners Corporate Research
goetzpartners securities Limited
The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.
T +44 (0) 203 859 7725 |

Registered in England No. 04684144.
Managing Directors: Dr Stephan Goetz, Martin Brunninger and Ulrich Kinzel.

To be added, or to change your subscriptions or to be removed / unsubscribed entirely from our CRM, please e-mail:

This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.

This communication (including any links and or attachments) from goetzpartners securities Limited (“GPSL”) is confidential and may contain information which is proprietary, privileged or otherwise legally protected against unauthorised use or disclosure. If you receive this communication in error or are not the intended recipient of this communication, please delete and destroy all copies in your possession, notify the sender that you have received this communication, and note that any review or dissemination of, or the taking of any action in reliance on this communication is expressly prohibited. GPSL shall not be liable for the improper or incomplete transmission of the information contained in this communication nor for any delay in its receipt or damage to your system. GPSL does not guarantee that the integrity of this communication has been maintained nor that this communication is free of viruses, interceptions or interference and makes no warranties in relation to these matters. This is not an offer or a solicitation to buy or sell securities or investment products, or an official confirmation. GPSL record electronic and phone communications in accordance with FCA and MiFID2 regulations, they will be monitored for regulatory and training purposes. GPSL is authorised and regulated by the Financial Conduct Authority of the United Kingdom (Firm Reference Number: 225563).

About GPSL: goetzpartners securities Limited is a member of the goetzpartners group and a leading true pan European investment bank and research firm. We bring together a wide range of expertise, insights and innovations to advance the interests of our clients around the world. The fast changing environment brings challenges for businesses and investors. Research innovation, digital transformation and disruptive business ideas reshuffle the corporate world in a yet unexperienced pace. Our sector knowledge and our global footprint bring together deep understanding of the industry, corporate intelligence and a wide network of top decision makers.

GPSL publishes and distributes “Investment” Research and “Corporate Sponsored” Research. Our Corporate Sponsored Research is free to access and is not classified as an inducement in a post-MiFID2 world. GPSL does not offer any execution or market making services.

Click on the following link for the GPSL MiFID2 Investor Guidance Notice

GPSL equity research publications are also available and accessible on the following aggregators (for Institutional Use Only): AlphaSense, Bloomberg (GOET), Capital IQ, EQS, FACTSET, RNS Reach and Thomson Reuters.

If you cannot click on the above hyperlink please copy the below link and paste it into your browser for the full pdf version of the equity research report:

Dissemination of a FINANCIAL NEWS, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.

End of Announcement – EQS News Service

show this