Nexstim H2'25: Overvaluation corrected

Translation: Original published in Finnish on 2/27/2026 at 7:00 am EET.

In H2, Nexstim continued its multi-year growth streak and guided for growth to continue this year. Revenue and earnings developed below our forecasts. This is explained by a lower average system price than we estimated and a surprisingly slumped recurring revenue. Nexstim published its long-term targets for the first time, aiming for over 20% growth. We expect growth in the current year as the Brainlab collaboration gains full momentum. Earnings growth is likely to remain moderate due to increasing operating costs. We lower our target price to EUR 11.5 (was EUR 12.0) on the back of estimate revisions. Our recommendation rises to Accumulate (was Reduce), as the market is now pricing the growth company more realistically. 

H2 saw growth but fell short of our forecasts

Nexstim's H2 revenue was 6.5 MEUR, representing a 16% increase year-on-year. Revenue fell short of our forecast (7.8 MEUR) due to a decline in recurring revenue and our overly optimistic estimate of the average selling price of devices. Recurring revenue, which is considered defensive, unexpectedly contracted significantly. According to the company, this was due to a shift from selling disposable components to a licensing model and a decrease in leasing contracts. Full-year revenue was 11.0 MEUR (+26% vs 2024). Nexstim's guidance for 2026 was the same as last year: revenue growth and improved earnings. We consider the probability of achieving the guidance to be high, as the Brainlab collaboration, which started last year, should reach full speed this year and drive growth.

Result turned positive – cash flow to follow

In H2, EBITDA landed at 1.5 MEUR and EBIT was 0.9 MEUR. The figures were slightly below our estimate due to low revenue. The gross margin was in line with our expectations, and operating costs were lower than we expected. The company stated that it will moderately increase its operating costs going forward. Profitability will be pressured in the future by the shift in sales towards distributor sales due to the Brainlab collaboration. For the full year, EBIT was 0.6 MEUR and cash flow after investments for the full year was at zero.

From a balance sheet perspective, the company's situation is stable. The company has reduced its debt, and following the year-end sales peak, trade receivables included 3.6 MEUR of low-risk future cash flow. Cash flows are turning positive, so the financing outlook is good, even though the company does not yet have the resources for aggressive growth investments.

Medium-term estimates down – long-term outlook unchanged

We are lowering our medium-term revenue and earnings estimates based on our updated assessment of the pace of sales growth and a lower expectation for the level of recurring revenue. For Sinaptica, we model 1 MEUR in revenue for Nexstim from the collaboration this year. Our long-term forecasts remain roughly unchanged.

Valuation is again cautiously attractive

We base our valuation on EV/S multiples and the DCF model, as the earnings level for the coming years is still on a rather uncertain footing. Nexstim's 2026e EV/S is 5.9x and 4.6x in 2027e. The earnings turnaround is gaining stronger traction, so we are ready to accept slightly higher valuation multiples for the stock than before. We find the multiples reasonably attractive for a company with growth prospects and high profitability potential. The DCF values the share at EUR 11.5. In our view, the stock is valued at a cautiously attractive level, but the margin of safety is thin due to the valuation multiples and forecast risk. We believe the stock's risk-reward ratio is attractive again, as the share price decline has moderated the valuation.