23-Dec-2020:  Ord Minnett:  Nova Eye Medical (EYE): Renewed iTrack sales growth points to a strong future

Analyst:  Dr DENNIS HULME, [email protected] +612 9377 1500  www.taylorcollison.com.au

• Speculative Investment
• Recommendation: Outperform
• Market Capitalisation: $49M
• Pro forma cash after capital return: $26.5m
• Share price: $0.34
• 52 week low: $0.285
• 52 week high: $0.465
• OM Valuation: $0.42/share

Nova Eye Medical (Nova) is focused on its high-growth glaucoma franchise following the sale of the Ellex laser and ultrasound business in June. The disposable iTrack catheter used in minimally invasive glaucoma surgery (MIGS) has been a key driver of revenue growth, delivering a sales CAGR of 31.4% from FY15 to FY19. While iTrack sales faltered in FY20, it has returned to its growth path in recent months, with sales in the 4 months ending 31 October 2020 13% higher than the previous corresponding period. Nova has expanded its glaucoma product range with the acquisition in July of the highly regarded but under-promoted Molteno3 glaucoma drainage implant, which will benefit from Nova’s sales and marketing infrastructure. Nova will seek a partner to support further development of its 2RT laser for treating intermediate age-related macular degeneration (iAMD). It has a strong balance sheet, retaining $26.5m in cash from the sale of the laser and ultrasound business, so it is well positioned to capitalise on organic and inorganic growth opportunities. We initiate coverage with an Outperform recommendation and a valuation of $0.42/share.

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