NSCI stock has price target cut at Echelon

Following the closing of a financing, Echelon Capital markets analyst Stefan Quenneville has chopped his price target on Nanalysis Scientific (Nanalysis Scientific Stock Quote, Chart, News, Analysts, Financials TSXV:NSCI).

On March 20, NSCI announced the closing of a private placement, selling 11,111,110 units at $0.45 for gross proceeds of $4,999,999.50.

In a research update to clients March 20, the analyst maintained his “Buy” rating on NSCI but lowered his price target on the stock from $1.40 to $1.20, implying a return of 216 per cent at the time of publication.

Quenneville explained the reasoning behind his decision.

“NSCI today announced the closing of its public offering and concurrent private placement for total gross proceeds of $5M,” he wrote. “The cash will be used to solidify its balance sheet and for working capital needs to support the roll-out of its CATSA airport security project and the growth of its benchtop NMR business. While we are trimming our price target to $1.20/shr (from $1.40/shr) due to the dilutive impact of the offering, we are maintaining our Buy rating on NSCI as we expect the stock to continue to recover as its base NMR business returns to consistent growth and investors begin to see the positive financial impact from the CATSA project as it ramps to operating at its full long-term run-rate in 2024.”

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

“We are maintaining our Buy rating on NSCI, though we are incorporating the dilutive impact of the offering, and accordingly reducing our price target to $1.20/shr (from $1.40/shr), which is derived using a 5.0x 2024E EV/Sales multiple, consistent with NSCI’s broader scientific instrument peer group.”

What does Nanalysis do? (via Echelon)

“Nanalysis Scientific Corp. engages in the development, manufacture, and sale of magnetic resonance products in the United States, Canada, Europe, Asia, and internationally. The company operates through four segments: Nanalysis, RS2D, K’Prime, and Corporate. It offers nuclear magnetic resonance (NMR) spectrometers; software module packages; cutting-edge electronics components for precision analytical instruments; and services for its NMR technologies. It serves pharmaceutical, security, biotech, nutraceutical, chemical, food, materials, medical, and education industries. The company is headquartered in Calgary, Canada.”