Nel (Sell, TP: NOK5.00) - Weak outlook, stretched valuation
Nel reported Q1 revenues in line with our estimate, but margins below. Management guided for a continued Covid-19 impact and offered no further visibility on the progress of negotiations with Nikola. Though partly driven by FX, we see the backlog growth as the bright spot in the report. With the valuation stretched on long-term estimates, adjusted EBITDA margins deeply negative and short-term headwinds expected to continue, we reiterate our SELL and NOK5 target price.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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