Nel (Sell, TP: NOK4.50) - Need to rebuild investor confidence
While management highlighted record-high revenues of >NOK1bn YTD with the Q3 results, we believe focus is on the fact that what appears to be its largest client YTD remains significantly behind on payments, with past-due receivables continuing to grow. Combined with softer outlook comments regarding new orders, this more than offset the positive of lower losses from operations than expected, in our view. We see a risk of reduced investor confidence until the above payment situation has been resolved. We reiterate our SELL and have cut our target price to NOK4.5 (6), reflecting an 8% discount to fair value based on peer group and fundamental valuation.NEL ASA develops diagnostic tests for early detection of diseases. Co.'s patented method is based on identifying disease-specific gene expression signatures from sample materials, such as blood. Co.'s products in development phase include MCItect, for patients with Mild Cognitive Impairment (MCI) aimed to detect Alzheimer disease within two years prior to onset of dementia, and ADtect, for the detection of mild to moderate Alzheimer disease, as well as one project in discovery phase, namely AMYtect, for brain amyloid detection.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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