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Analyst Comment

Nexstim’s system sales progressed well in H2

By Antti SiltanenAnalyst
10.01.2024, 07.57
Nexstim

Translation: Original comment published in Finnish on 1/10/2024 at 7:33 am EET

Nexstim’s H2 was positive in terms of announced system sales. During the reporting period, the company announced 16 system sales of which 11 occurred in Q4. The total number of deals will only be revealed in the H2 report as not all deals are announced with a press release. Depending on the final number, the period may be the best in the company’s history. This provides a positive base for this year, when we expect licensing revenue to start with Magnus Medical commercializing the system. Sales also needs to be on an upward trend to achieve more permanent profitability.

A record year in terms of adjusted revenue and possibly also system sales

Nexstim sold 24 systems in 2021. Of these, 16 were more valuable diagnostic systems (NBS) and 8 were slightly cheaper therapy systems (NBT). In the following year 2022, sales were slightly lower with 22 systems (of which 14 were NBS). The first half of last year was subdued with eight system deals, but the pace accelerated clearly toward the end of the year. According to press releases, 16 system deals were made in H2 (incl. one announced tendering win), i.e. 24 in the full year (of which 22 were NBS). Earnings reports typically also provide information on additional deals for which no separate release was issued. Thus, 2023 may become the best system sales year in the company’s history, both for the entire financial year and H2, depending on the detailed sales figures.

H2’s announced deals were all more expensive NBS systems. This only indicates a possible shift in the slightly cheaper NBT systems for therapeutic applications to a marginal group in Nexstim’s business. Sales focusing on NBS systems was also reflected in revenue which was some 7 MEUR based on preliminary information (H2’23: 4.5 MEUR). Thus, the full financial year and H2 are also the company's best measured in revenue excluding the one-off licensing income of 3.5 MEUR in the comparison period H1’22. The key question for the future is whether the strong H2 is explained by a trend-like increase in demand or possibly by pent-up demand from previous weaker periods that now dissolved in a one-off.

Growth expectations for 2024

We updated our view on Nexstim’s share in connection with the recent guidance revision. We expect strong growth from the company during 2024, which consists mainly of system sales, but also of the expansion of the clinic network and licensing income starting in H2’24. H1 is typically seasonally weaker for the company, so we closely monitor the development of system sales. Nexstim announced at the turn of the year that three system sales had moved to this year due to delays in customers' decision-making. This creates positive expectations for this year, but the company's sales must also continue as strong so that cash flows turn permanently profitable.

Nexstim

2.57EUR09.01.2024, 18.00
3.00EURTarget price
Accumulate
Recommendation updated:03.01.2024

Nexstim operates in medical technology. The company has developed a non-invasive brain stimulation technology called SmartFocus®. It is a navigated transcranial magnetic stimulation (nTMS) technology with 3D navigation providing targeting of the TMS to the specific area of the brain. The technology is aimed for the treatment of major depression and chronic neuropathic pain. The company was founded in 2000 and has its headquarters in Helsinki.

Read more on company page

Key Estimate Figures03.01.2024

202223e24e
202223e24e
Revenue9.57.08.8
growth-%48.9 %-26.6 %25.7 %
EBIT (adj.)0.8-1.1-0.4
EBIT-% (adj.)8.8 %-15.6 %-4.8 %
EPS (adj.)0.18-0.17-0.07
Dividend0.000.000.00
Dividend %
P/E (adj.)22.8neg.neg.
EV/EBITDA22.0neg.513.5
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