Nel (Sell, TP: NOK7.00) - Expensive relative to peers
Nel’s Q1 revenues were 17% below consensus and 11% below our estimate, leading to a hit to near-term EV/sales multiples frequently used to value the shares. With inflation affecting input costs, we expect the pressure on gross margins to continue in the coming quarters, despite the small improvement in Q1. With only a 5% backlog increase in Q1 and a higher cost base, we have reduced our near-term revenue and EBITDA estimates (revenue cut by 10% for 2022 and 13% for 2023). Peer-group multiples imply that Nel should be trading at NOK7–8. 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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