Nexstim OYJ (NXTMH-FI): FY2018 results reflect growing focus on therapy

goetzpartners securities Limited

12-March-2019 / 08:16 GMT/BST


Free to access research and investor meetings in a post-MiFID2 world.

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.

Published to the market and investors on 12th March 2019 @ 7.55am (GMT).

Nexstim OYJ (NXTMH-FI): FY2018 results reflect growing focus on therapy
Recommendation: OUTPERFORM
Target Price: EUR8.40
Current Price: EUR0.85 (CoB on 11th March 2019)

KEY TAKEAWAY

Nexstim reported FY2018 sales of EUR2.7m, broadly flat vs. EUR2.6m in FY2017, as a 127% increase in US sales was largely offset by a -56% decline in Europe. The company reported solid installed-base growth, bringing the total number of installed Navigated Brain Stimulation (“NBS”) and Navigated Brain Therapy (“NBT”) systems to 160 (+10 YoY) and 10 (+10 YoY), respectively. As a result of the increased focus on NBT commercialisation, we are revising our sales forecasts for FY2019E and out-years to account for pay-per-use (“PPY”) sales. YE2018 cash stood at EUR7.2m, which should allow the company to fund operations until YE2019E. Nexstim also announced a potential divestment of its NBS business and will provide an update following the AGM on March 25th. We continue to believe that Nexstim is well-positioned to find broad adoption across the depression market, affecting more than 10 million individuals in the US alone. We reiterate both our OUTPERFORM recommendation and EUR8.40 target price (“TP”).

FY2018 results reflect successful commercial launch of NBT for depression

Despite reporting flat sales growth, the operating loss increased by 13% to EUR6.3m due largely to investments into the sales infrastructure in the US. Personnel expenses grew by 18% YoY as a result of the addition of 6 new sales people in the US, bringing the total sales staff to 10. The expanding US team should allow the company to increase sales rapidly in 2019E. Following the distribution agreement with Hong Kong-based Ampere Medical in October 2018, Nexstim recently announced the signing of an additional agreement with Canadian Health Solutions to bring NBT for depression to the Canadian market.

Adjusting 2019E sales and beyond to reflect NBT pay-per-use model

In light of the FY2018 results we adjust our forecasts to reflect expected delays in monetisation associated with the PPY sales model used in the US. We have also adjusted our NBS sales forecast in line with historic growth to reflect an increased commercial focus on the therapy business. As a result of our adjustments, we have trimmed 2019E and out-year sales, and now expect profitability in 2022E (vs. 2021E prev.). Due to the inherent revenue lag associated with the PPY model, we anticipate sales on the back of the growth in NBT installed base to be increasingly realised from 2019E.

We maintain our target price of EUR8.40

We value Nexstim based on a DCF approach using a WACC of 14%, which yields a fair value of EUR8.40 per share. We continue to believe that Nexstim is well-positioned to enter a period of accelerated growth as the therapy business starts to gain traction and recurring revenues from systems consigned in 2018 begin to be realised from 2019E. The main risk to our TP are low adoption and utilisation rates, which could lead to lower than expected top-line growth. We reiterate both our OUTPERFORM recommendation and EUR8.40 target price.

Kind regards, Kind regards,

Martin Piehlmeier | Analyst

goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.

T +44 (0) 203 859 7725 | martin.piehlmeier@goetzpartners.com / healthcareresearch@goetzpartners.com

www.goetzpartnerssecurities.com

goetzpartners securities LinkedIn page

Registered in England No. 04684144.

Managing Directors: Dr Stephan Goetz, Martin Brunninger and Ulrich Kinzel.

goetzpartners securities Limited – Team Members

Equity Research Analysts – Martin Brunninger, Brigitte de Lima, Chris Redhead, Martin Piehlmeier and Kieron Banerjee.

Sales / Marketing – Erland Sternby.

Corporate Finance – Ulrich Kinzel, Wolf Dornbusch and Youchen Xin.

Corporate Access and IR – Tanya Tracey and Bettina Ellinghorst.

Compliance – Paul W. Dunne.

Click here to see our privacy policy.

GPSL has a formal client relationship with Nexstim OYJ.

GPSL publishes and distributes “Investment” Research and “Corporate Sponsored” Research. Our Corporate Sponsored Research and investor meetings (e.g. NDRs, 1 to 1 meetings) are free to access and attend and is not classified as an inducement in a post-MiFID2 world, this is because the issuer is paying GPSL. GPSL does not offer any execution or market making services. This is a marketing communication as defined by the Financial Conduct Authority (“FCA”). The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).

In accordance with the General Data Protection Regulation (“GDPR“) – if you would like to be removed / unsubscribed from our CRM (also please note that you are free to contact GPSL at any time in the future to have your e-mail subscription amended), please e-mail:
researchproduction@goetzpartners.com

About GPSL: goetzpartners securities Limited is a member of the goetzpartners group, and a leading pan European investment bank and research company. 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 at a relentless pace. Our sector knowledge and our global footprint bring together corporate intelligence and a deep understanding of the industry with a wide network of top decision makers. These collective insights help our clients to stay at the leading edge of change.

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 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).

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

Recommendation Overview (MAR)

GPSL Equity Research publications are available on the following aggregators and via news distribution circuits (For Institutional Use Only): AlphaMetry, AlphaSense, Bloomberg (GOET), Capital IQ, EQS, FACTSET, ResearchFN, Research Tree, RNS Reach, Sentieo and Thomson Reuters.

Please copy the below link and paste it into your browser for the full pdf version of the equity research report:

https://gp.bluematrix.com/sellside/EmailDocViewer?encrypt=54a63091-cb49-4560-93b1-3e70e2f98ecb&mime=pdf&co=gp&id=paul.dunne@goetzpartners.com&source=libraryView

Free to access research and investor meetings in a post-MiFID2 world.

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.


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


End of Announcement – EQS News Service

show this