Nel (Sell, TP: NOK7.00) - Full (cash-burn) speed ahead
Q4 was affected by one-offs and timing effects, making the line items in its Q4 results less relevant for future performance. We believe management has the right strategy by continuing aggressive expansion plans, trying to establish a market-leading position and achieve profitability, although in our view Nel needs to raise equity. Benefitting from a premium valuation, we believe it should raise capital sooner rather than later and do not foresee any challenges to attract additional capital, as its market cap is NOK25bn. We have made limited estimate changes and still view the shares as trading at excessive levels fundamentally and versus peers. Peer-group EV/sales suggests c45% downside risk to the share price. 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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