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NSCI stock is undervalued, Echelon says

NSCI stock

Following the release of preliminary fourth quarter results, Echelon analyst Stefan Quenneville remains bullish about Nanalysis Scientific (Nanalysis Scientific Stock Quote, Chart, News, Analysts, Financials TSXV:NSCI).

On February 6, NSCI issued a press release stating that its fourth quarter revenue would be at least $9.3-million, which would be a record.

“We are very pleased with how the fourth quarter closed out 2023, a year not without its challenges,” CEO Sean Krakiwsky said. “While our security services business continued its ramp through the end of the year, we also had strong results in our Benchtop sales that we expect to continue into the first quarter. With both Benchtop NMR and security services contributing significantly, we were able to achieve fourth quarter unaudited revenues of between $9.3-million and $9.8-million, constituting a new record quarter for Nanalysis.”

The analyst said this was a beat.

“Nanalysis today reported preliminary Q423 results that were ahead of our expectations, driven by solid benchtop NMR momentum and sales and ongoing progress on the CATSA project,” he said. “We are encouraged by the solid close to what has been a bumpy year for the Company, and we are maintaining our Buy rating and $1.40/shr target price given its promising long-term prospects. We expect the stock to continue to recover as its base NMR business returns to consistent growth and investors begin to see the impact from the CATSA project as it ramps to operating at its full long-term run-rate in 2024.”

In a research update to clients February 6, Quenneville maintained his “Buy” rating and price target of $1.40 on NSCI, implying a return of 186 per cent at the time of publication.

The analyst thinks the company will post EBITDA of negative $8.9-million on revenue of $28.1-million in fiscal 2023. He expects those numbers will improve to EBITDA of negative $2.5-million on a topline of $34.1-million the following year.

“We have made some adjustments to our model, and we are introducing our 2024 estimates of revenues of $34.1M (~21% y/y growth) and EBITDA of –$2.5M, with growth being driven primarily by the sequential ramp-up of CATSA to its long-term run-rate throughout 2024 and the benchtop NMR business returning growth of ~15% y/y,” he concluded. “We are maintaining our Buy rating and price target of $1.40/shr, which is derived using a 5.0x 2024E EV/Sales multiple, consistent with NSCI’s broader scientific instrument peer group.”

Calgary-based Nanalysis Scientific makes and sells compact nuclear magnetic resonance (NMR) spectrometers and magnetic resonance imaging equipment for a number of industries including pharmaceutical, biotech, chemical and security.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.
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