Nexstim is a Finnish MedTech company and a global leader in navigated transcranial magnetic stimulation (nTMS) technology. With nTMS, Nexstim helps (i) surgeons preserve patients' motor and speech cortices and (ii) clinicians treat neurological and psychiatric disorders. Here's how: Nexstim's system sends gentle magnetic pulses through the skull, without any incisions, prompting a specific part of the brain to respond. A live 3D map tracks that response in real time, letting doctors pinpoint the targeted spot with an accuracy no competitor can match. The company is now seen transforming from a niche Finnish MedTech player into a truly global platform serving neurosurgery, psychiatry and neuroscience research.
At the centre of the investment case is the navigated brain stimulation (NBS) System 6. It allows hospitals and clinics to host pre-surgical brain mapping, depression treatment and other applications on a single modular platform. This creates an attractive model, where one platform unlocks cross-selling via software updates. Nexstim markets the NBS 6 system across three segments: Diagnostics, Therapy and Research & Neuroscience.
Diagnostics is one of two main commercial spearheads. Here, Nexstim helps neurosurgeons map essential brain functions before surgery. The global installed base of c. 270 systems create significant clinical references and follow-on opportunities. But this is just the beginning. A recently signed distribution partnership with Brainlab, whose c. 14.5k systems span c. 6.7k hospitals in 127 countries, could materially accelerate the global scaling of Nexstim's platforms.
Therapy is the second, fast-growing segment, having achieved c. 18% organic CAGR between 2020-25. Yet, this segment is still in its early innings. Here, Nexstim helps treat major depressive disorders (MDD) and chronic neuropathic pain patients, with c. 145 systems delivered. The Therapy segment is seen to hold immense potential: the addressable market for severe depression is large (€ 2.3bn in US & EEA; eNuW) and fragmented.
Research & Neuroscience serves as a laboratory for Nexstim, in which nTMS is tested on new promising indications (i.e. Alzheimer), potentially paving the way for significant commercial openings.
Profitability is set to attain a strong structural margin. After 25 years of R&D, Nexstim achieved its first profitable years in FY22 and FY25. With gross margins oscillating between 75-80%, limited operating-cost growth and a growing installed base, further revenue growth should unlock meaningful operating leverage. We expect EBIT margins to expand from c. 6% in FY25 to a structural 24% by FY33e, while sales are set to continue compounding at c. 18% CAGR between 2025-33e (eNuW).
We see Nexstim as an under-the-radar opportunity in the defensive MedTech sector. The combination of a scalable business model, a differentiated technology platform, Brainlab's distribution power and untapped therapeutic opportunities, creates an attractive setup for sustained profitable growth. We initiate with a BUY rating and a PT of € 12 based on DCF model.
ISIN: FI4000506811
