Nano Dimension: An Interesting Speculative Buy Based On Cash On Hand (NASDAQ:NNDM)

Nano Dimension Inventory is Considerably Undervalued

Nano dimension Ltd. (NASDAQ:NNDM) has continued to fall by means of over the previous yr since our final evaluation on the inventory, bringing it right down to additional discounted costs (-23% over the final yr). The corporate, which is concerned in 3D printing and AI investments and acquisitions (Determine 1), has struggled to realize any floor all through 2022 and now sits deeply discounted in response to the sum of the components by means of stated acquisitions, and whole money readily available. The corporate is well-positioned to proceed to develop at a speedy tempo, as their merchandise are in rising demand, and due to this fact its development prospects are wonderful.

Determine 1. Nano Dimension brings a number of 3D printing and synthetic intelligence companies collectively beneath one roof to offer accelerated innovation & development

The firm has accomplished an important job making gradual calculated investments within the subject of micro 3D printing and it has paid off by means of sturdy income development and diversification. For the inventory to actually flip round and development upward, we might want to see a push in direction of profitability as corporations that aren’t making a living are usually not performing within the present markets (microcaps). We can even must see detailed plans laid out by the administration crew as forecasts, estimates, and common enterprise route has been laid out little to none for buyers regardless of having a robust storyline. If this together with a common macroeconomic market turnaround occurs in 2023, we might see the inventory as a lot as doubling again to the $4 to $6 vary, in our opinion. This makes Nano Dimension a great worldwide decrease danger, increased reward funding in revolutionary small cap know-how.

Breaking Down Nano Dimension

Nano Dimension’s inventory is at the moment buying and selling at ~$2.70 per share. The inventory has had a 52-week vary of $2.06-$4.16 and sits at a market capitalization of ~$640 million. Nano Dimension is a worldwide chief within the additive manufacturing of electronics by means of 3D printing and nonetheless holds large quantities of money from sale of inventory at all-time highs now effectively over a yr in the past. The inventory boasts over a billion {dollars} in money readily available with lower than $12 million in debt, giving them a uncommon detrimental enterprise worth and an affordable worth to guide ratio of simply 0.5x guide worth. Traders are betting that copious quantities of spending shall be wanted earlier than the corporate can ship enticing outcomes, and we disagree with this undervaluation, as NNDM has confirmed they will do a great job of unlocking worth by means of numerous smaller acquisitions (Determine 2). We imagine the inventory ought to at the very least commerce close to a optimistic EV, which might point out as a lot as 50-70% upside from present costs. At these deeply discounted costs, though speculative, a merger or acquisition from a bigger entity would make sense in our view to unlock the potential inside NNDM. Becoming candidates would come with 3D Programs Corp. (DDD) and Stratasys Ltd. (SSYS). A giant transfer like this might propel the inventory increased at a speedy tempo, however in the interim it seems low quantity & inventory motion may very well be a continuing actuality barring any breaking information.

Determine 2. Nano Dimension continues to develop numerous new alternatives within the 3D printing realm

Dangers

Nano Dimension’s inventory is traded on the Tel Aviv Inventory Alternate and the Nasdaq Capital Market being primarily based out of Israel. Any worldwide inventory comes with a further quantity of uncertainty. The corporate can be nonetheless within the improvement stage and has not but commercialized any of its merchandise at scale. Nano Dimension’s inventory can be unstable, and the corporate’s share worth has been identified to fluctuate quickly in each the upward & downward route experiencing sturdy dilution by means of the sale of inventory in 2021. Traders ought to pay attention to these dangers earlier than investing in Nano Dimension’s inventory. Nano Dimension’s debt stage is not any problem with giant quantities of money readily available. Some further dangers related to investing in Nano Dimension’s inventory embrace the corporate’s restricted working historical past & in flip unpredictable steerage estimates, unsure future profitability, and reliance on a small variety of key personnel (~300 staff). Regardless of these dangers, Nano Dimension in our opinion has a great danger vs. potential return buying and selling effectively beneath the worth of money readily available and will unlock worth in numerous methods if buyers are prepared to have the persistence to attend out their subsequent massive transfer.

General Abstract

As said, Nano Dimension is an ever rising 3D printing firm that trades close to 52-week lows. Whereas the corporate’s inventory is deeply discounted, 3D printing may very well be the subsequent massive area of interest business to take off over the subsequent half decade or sooner. Acquisitions at a good worth and slowly rising gross sales numbers will proceed to develop the shares income and push in direction of enhancing profitability. Nano Dimension may very well be thought-about for a really small portion inside one’s speculative portion of their portfolio on the account that it trades beneath the sum of components. Potential for a giant transfer in 2023 or past is there with NNDM purely due to the business they’re in and their distinctive money state of affairs (Determine 3). We imagine a lot additional draw back beneath the $2-$2.5 vary is relatively unlikely with upside targets throughout the $4.5-$5.5 vary lifelike, giving the inventory a strong long-term risk-return ratio.

Determine 3. Only a few names in any business have a money state of affairs fairly like Nano Dimension giving them the chance to be an unparalleled development automobile for 3D printing