Nano-X Imaging went public last month, opening at $20.34 after pricing 9.17M shares at $18
Shares of Nano-X Imaging (NNOX) are under pressure on Tuesday after Andrew Left's Citron Research claimed in a new short report that the shares of the newly public company are heading to zero. "We see right through it as a stock promotion that is actually insulting to anyone who spends 10 minutes to read the prospectus. This stock is heading to $0 as the company's recent fair value opinion on their technology is $0.14 a share," the short-seller argued in the report. In a research note following the report, Cantor Fitzgerald analyst Steven Halper told investors that he believes concerns are "unfounded." The analyst had initiated coverage of the stock on Tuesday morning with an Overweight rating.
'SHARES HEADING TO ZERO': In a new short report, Andrew Left's Citron Research claimed that shares of Nano-X Imaging are heading to zero. "We see right through it as a stock promotion that is actually insulting to anyone who spends 10 minutes to read the prospectus. This stock is heading to $0 as the company's recent fair value opinion on their technology is $0.14 a share." Nano-X "has never published any data showing their machine's images compared to images from a standard CT scanner," the firm, who takes short positions in the names it writes about, said in a report posted on its website. "There is not one scientific paper or that would back up any of these claims. As a matter of fact, we have not even seen proof of the product and have only seen a mockup drawing of what this machine is supposed to look like," Citron wrote.
CONCERNS 'UNFOUNDED': Commenting on the short report, Cantor Fitzgerald analyst Steven Halper told investors that he sees the concerns as "unfounded" and that he appreciates the fact that Nano-X is an early-stage company with "significant growth opportunity." The analyst noted that the shares traded lower on Tuesday due, presumably, to a report that questions the legitimacy of the company's growth potential.
On published data, he pointed out that the prototype device has been in place at Hadassah hospital in Jerusalem, a large and well-known hospital in Israel. Data used for the FDA was gathered at this site. With respect to FDA, it is certainly customary for device companies to use a 510k approval process, which compares the device to predicate technology, he added, highlighting that "the regulatory threshold is much lower when you are proving comparability." On R&D spend, Halper noted that Nano-X acquired the technology from Sony (SNE), which, according to its CEO, spent $1B on the technology before the acquisition. Finally, with respect to customer orders, he is "very comfortable" with the clients that were disclosed in the company's filings. Halper continues to expect the company to install 15,000 units by 2024 and for peak revenue to reach $900M by 2026.
In a prior research note on Tuesday, the analyst had initiated coverage of Nano-X Imaging with an Overweight rating and $70 price target. Noting that Nano-X is developing a proprietary digital X-ray source and a scanner known as the Nanox.ARC, the analyst told investors that he believes the company's technology will allow it to bring imaging services to under-developed markets with a much lower price point compared to traditional technologies. Further, Halper estimates the company will install 15,000 Nanox.ARC units by 2024. He also believes the long-term, risk adjusted growth potential is not reflected in the shares' current valuation.
Meanwhile, Berenberg analyst Ravi Misra initiated coverage of Nano-X Imaging with a Buy rating and $65 price target.
EXECUTION RISK: Oppenheimer analyst Suraj Kalia also started coverage of Nano-X Imaging with a Perform rating and no price target. The analyst acknowledged that the company's efforts in field-emission flat-panel display technology "could potentially disrupt the X-ray imaging space" by mitigating issues with traditional heat-based X-ray filament technology, potentially providing better resolution at lower radiation, and introducing an MSaaS - Medical Software as a Service - subscription model in lieu of high up-front cap-ex. However, Kalia recognized the inherent execution risk in the early-stage company. While exciting, Nano-X 's technology has yet to be validated in real-world settings, he added.
PRICE ACTION: In afternoon trading, shares of Nano-X have dropped almost 20% to $39.48.
Published September 15th, 2020 11:35, upgraded September 15th, 2020 3:13