Nel (Sell, TP: NOK7.00) - Downside potential remains
While we expect a somewhat smaller EBITDA loss than consensus for Q2 (NOK-124m versus NOK-138m), with a similar picture for the next few years, we maintain our muted view on Nel. We believe its valuation looks demanding standalone and on a relative basis. Also, the recent IPO of close peer thyssenkrupp nucera brought the market another reference point, and suggests c45% potential downside to Nel, with a wider peer group implying ~50% downside potential. We reiterate our SELL and NOK7 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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