Investing in companies that are in their early growth stages will typically result in two different scenarios. A growth company can eventually achieve profitability and provide strong returns to shareholders that invested for the long haul, or it can crash and burn and result in a significant loss of invested capital. That’s part of the allure of growth investing since buying shares of a potentially revolutionary company might deliver huge gains. One growth company has been generating significant buzz in the investment world since it’s IPO date earlier this year and will likely follow one of the narratives mentioned above.
Nano X Imaging (NASDAQ:NNOX) is a start-up company that is aiming to make huge technological advances with X-ray technology. There are plenty of skeptics that are quick to write off this Nano-X thanks to the fact that its technology has yet to be approved by the FDA, but there is undeniable potential here. If you are an investor that can stomach some volatility in exchange for the possibility of massive gains, Nano-X Imaging stock might be worth a look. Here’s a little bit more about why the Israel-based company is worth watching going forward.
Upgrading X-ray Technology
As we mentioned earlier, Nano-X imaging has developed a digital X-ray source that could revolutionize the medical imaging world. The big difference between Nano-X’s devices and the existing X-ray technology is that they do not need to generate substantial amounts of heat to function. Currently, medical devices that use X-rays such as MRI and CAT scans need to generate up to 2,000° Celsius of heat to produce the electron streams necessary for X-ray emission. As you can imagine, generating that type of heat is not exactly cost-friendly, which is why Nano-X is in the spotlight.
Nanox.ARC is the company’s modern take on the X-ray and could be a game-changer. It uses a low-voltage cold cathode that digitally generates electronics and has a chance to successfully replace the thermionic filament in existing X-ray tubes. The metal filament design that uses heat to power every X-ray tube today hasn’t been changed in over 100 years, which tells us that any updates would be welcomed by the medical community.
As we mentioned earlier, the current technology that powers legacy X-ray machines is quite expensive to install and operate. That means that if Nano-X can get its devices approved by the FDA and other major regulatory authorities, it has the potential to improve healthcare around the world. The company estimates that roughly 2/3 of the world’s population currently has no access or limited access to X-ray technology due to its high costs. With its Nanox.ARC system, healthcare providers can get access to X-ray tech and pay less for up-front costs and maintenance costs, which could deliver substantial earnings growth for the company over time. There are plenty of potential customers for Nano-X, including outpatient clinics, hospitals, and countries with limited medical imaging availability.
Nano-X also claims that it can decrease the wait times for X-ray image processing, which can take months in some cases, thanks to its cutting-edge tech. As of the company’s Q3 business update, it has 5,150 total contracted deployments across 13 countries. The company offers a pay-per-use business model that charges a fee for every scan that occurs on its devices. That could lead to significant top-line growth for the company, especially when you consider the large total addressable market. Investors seemed to be impressed by the company’s live demonstration of its Nanox.ARC prototype at the 2020 Radiology Society of North America Virtual Annual Meeting in early December and any further positive updates from the company next year could send shares rallying higher.
Nano-X went public back in August and is up over 260% since its debut, which is certainly impressive considering that the company has no revenue and has yet to receive FDA approval for its medical device. The company submitted a 510(K) application to the FDA in January 2020 and plans to deploy the first Nanox.ARC in the second half of 2021 if it is cleared. It’s evident that investors recognize the potential here, and you certainly have to be intrigued by the applications of this technology. However, whether or not the stock is a buy will depend on your risk tolerance levels.
These types of investments can be extremely volatile, and we’ve already seen several large price fluctuations since the stock began trading. Perhaps the best approach for investors that are interested in this company is to patiently wait for more confirmation that the technology is headed in the right direction. In the meantime, adding Nano-X to your watch list and tracking its progress is definitely worth your time.Leave a comment