Is Nanox ($NNOX) Over or Under Valued?
I have been looking into Nanox Imaging for a while. Infact, first I posted about their IPO. Then I made an article about whether Nanox can garnish long term support. I thought I wouldn’t need to talk about Nanox for a while afterwards, but then firms shortened it. My last two articles were in response to Citron and MuddyWaters Research. In-fact, this draft was anticipated to be written on the 21st of September, but a lot already happened. The day I was going to release this post, it was delayed because of the recent short report, which I believed happened on a SSR day. The question now relies, is Nanox over or undervalued? This paper will look at my few cents, (considering my confirmation bias) in being bullish on Nanox.

First let us start with the total addressable market. Zion Market Research states that by 2025, the global medical imaging market will reach $48.6 billion. You also need to consider that Nanox wants to target the “2/3rds of the world not scanned”. This can set Nanox to become a key player in the medical imaging market, but is speculative. Hence why, I’m excited.

Nanox Imaging also has a whole bunch of intellectual property. Infact, their intellectual property patents may give them a competitive edge or barrier to entry in comparison to some of the bigger players. One of the top things Nanox has for them is an opportunity to still be considered early into the market with a barrier to entry.

Analyst have also been seemingly positive on the sale side. You see here, that 3 analyst rated it with 2 buys and 1 hold. If you look at Zack’s Ranks scorecard however, 3 researchers are giving it a hold. Zack’s Ranks said, they are in the top 31% in their sector, but bottom 35% in their industry. This isn’t too bad considering it just IPO’d then people shortened it. The industry is also quite large. However, with positive buy side or people indicating hold, a moderate buy isn’t bad.

The tool WalletInvestor also seems bullish, but the tool isn’t that reliable given targets change a lot and a 70.39% accuracy metric. However, although the fluctuations, generally I find WalletInvestor quite useful. ChartMills have given it a low setup rating, but for the past two weeks the data that showed up on the ChartMills page was inaccurate. It was only recently updated. It is still too early for a TA rating from them, and I think I am more excited about what the analyst been saying.

I also have came out previously with a chart on why I might be super long for Nanox. This is something I sort of mentioned many times prior, and many of the reasons still stand.

Source: algowins.com

Seeing the table above, recent short volumes trending around the 40% or more shows some bearish correlations. However, you have to keep in mind the short sell reports that came out and the percentage float. With what has been going on with Citron, Empirical Research, and MuddyWaters Research, I wouldn’t be surprised if the resistance level pops soon.

Source: Finviz

Also looking at what analyst are expecting for year over year growth, as well as current ratios + debt, I don’t see this business being run into the ground any time soon. I see the potential of a financially responsible business, with decent market growth tackling different aspects of the market.

Also, look at the MSaaS Model they have (from their presentation)

MSaaS Slide

True, this says potential. However, they already were able to garnish a variety of partnerships and distributors + are working extensively as we speak. This includes the SPI Medical Agreement, The Gateway Group and the factory (amongst others).

You can see that they were outperforming the S&P500 before the short sell reports, and after the short sell reports how much the volumes have increased. Even considering the short percentage isn’t too high when looking at the stock’s overall history, it has been incremental. There are reasons to believe that the shorts could potentially be “squeezed” soon. This is especially looking at the short interest vs. support levels.

Another thing you need to consider is the executive team. The CFO is Itzhak Maayan, who was part of Perrigo, a previous CFO at Cisco Systems in Israel, an early XTIVIA’s CFO, and a CFO for Kulicke & Soffa. This guy also has previous auditory experience. It is almost as if the company went out of their way to find the best CFO in Israel.

Even MorningStar which rarely gives 5 star prices, at least put Nanox as fair valued. I personally think a marketcap of $5 billion for a company about the size of where Nanox is now, isn’t too far fetched.

Other sectors that Nanox’s tech can disrupt include:

X-Ray imaging for airports

The manufacturing industry

Self-Driving Cars (AI and Chip design)

and many others. Nanox is currently focused on medical imaging, but whose to say licensing or outside of medical deals are off the table? I think people are potentially undervaluing or underestimating Nanox, and that the future might be quite surprising. That being said, it seems like anything can happen.

I do engage in research related to the sensory tech and medical device industry. However, I hold no relations to Nanox Imaging or working with Nanox Imaging. My only current conflict of interest is being long on its stock.

Disclosure: Please keep in mind, everything I say is on an opinion based basis. This is not meant to be taken seriously or as actionable financial advice. Do your own due diligence and any trades/investments you do is at your own risk. We are not responsible, proceed with caution and we are trying to voice an opinion not meant to warrant action. This is solely meant to be viewed as a non actionable opinion not meant to be taken as seriously or as a form of actionable advice.
['Andrew Kamal']
['Stock Market', 'Stocks', 'Technology', 'Medical', 'Startup']