Leede Financial launched coverage of Nanalysis Scientific (TSXV: NSCI) (OTCQX: NSCIF) with a “speculative buy” rating and C$0.90 target price. The stock closed at $0.365 on November 22.
Nanalysis operates two distinct businesses in the scientific instrumentation universe, one focused on low-field NMR capital equipment production and the other in security services. Nanalysis currently operates under two divisions, one focused on capital equipment manufacturing and sales that is ostensibly based on the firm’s patented flagship low-field benchtop NMR platforms, branded as 60e, 60Pro, 100e, & 100Pro (the numbers refer to the magnetic field strength in which analytical samples are introduced for chemical structure determination). The second is a services division that going forward will be materially influenced by a new six-year equipment services contract with the Canadian Air Transport Security Authority (CATSA).
“Security services is now contributing positively to top-line growth and EBITDA is trending positively after several quarters of soft profitability, “ writes analyst Doug Loe, PhD. “The firm’s core benchtop NMR system franchise was developed by Nanalysis itself and still forms the core of the firm’s value proposition to customers and shareholders. More recently, the firm has grown more aggressively by acquiring European-based subsidiary RS2D SAS, which manufactures electronics components for precision analytical instruments, and AZ-based analytical instrumentation service provider K’Prime Technologies which will be most responsible for overseeing the long-term CATSA contract indicated above.”
Dr. Loe writes, “High-field NMR spectrometry and MRI imaging are actively being contemplated as next-generation platforms for the firm, and though our model does not at present ascribe market value to high-field NMR/MRI systems that could be developed down the road, they do provide revenue upside to our investment thesis,” writes analyst Doug Loe, PhD.
