We hosted Nexstim at the European MidCap conference in Paris last week and came back convinced of the long-term commercial potential of navigated transcranial magnetic stimulation (nTMS). In Diagnostics, Brainlab has the strategic fit and the installed base to drive market adoption. In Therapy, nTMS has numerous applications, with major depressive disorder (MDD) serving as the commercial spearhead. In Alzheimer's disease, the collaboration with Sinaptica is progressing well, yet we do not expect Phase III readouts before FY28.
In Diagnostics, Brainlab is not a mere distributor of NBS systems but integrates nTMS mapping into its neurosurgical workflow. This matters because nTMS is a relatively novel technology in presurgical brain mapping, compared with established modalities such as functional MRI (fMRI). In fact, many clinics still operate without any presurgical mapping, locating motor function only during surgery. For these surgeons, as for those relying on fMRI, nTMS offers greater accuracy but entails an incremental workflow step, an additional vendor and a capital investment of $ 300k per system that the hospital must justify.
The Brainlab integration significantly lowers these barriers to adoption, removing the separate vendor relationship and folding the extra step into an existing, comprehensive neurosurgical offering. It already sells the core of the neurosurgical workflow, from planning software and navigation systems to intraoperative imaging and neuromonitoring. Brainlab is the market leader in neurosurgical planning and navigation by installed systems on the combined European and North American market, serving c. 4k healthcare facilities. In FY25, it generated 68% of its € 492m group revenue from cranial and spinal surgery.
Therapy recurring revenue is in transition. Therapy recurring sales fell 14.8% to € 1.1m in H1'26, as some customers moved from disposable head trackers to the reusable NBS 6 tracker. Three factors are seen to soften the hit. Head tracker licensing fees replace part of the disposables stream at full margin, so gross profit is less impacted than revenue. The reusable tracker is recommended for up to ten uses, so reorders continue, albeit at roughly a tenth of the previous volume. Service agreements, which account for a significant share of Therapy recurring sales, remain unaffected.
Competition is more intense in Therapy than in Diagnostics, exposing the segment to potential price erosion. Yet, we regard the risk as somewhat limited for Nexstim, as it targets premium clinics that accept a higher price point in exchange for navigated accuracy. We note that Therapy ASPs have remained stable since the launch of NBS 6, and we see no sign of price pressure.
We leave our estimates unchanged despite strong order intake. Year-to-date announced orders of 38 systems already cover 83% of our FY26 delivery estimate of 46 systems (eNuW). Under the new Diagnostics distribution model, however, Brainlab stocks part of these systems in its regional hubs, which pulls Diagnostics demand forward in the year. Q4 remains the key test for our estimates, as the business remains seasonal, particularly in Therapy, where 91% of FY25 system sales fell in H2.
We reiterate BUY with an unchanged PT of € 12.
ISIN: FI4000506811