Why is Next Science (ASX:NXS) share price rising?
Jason McIntosh explains why Next Science (ASX:NXS) could be a stock to buy now. It’s an ASX small cap with blue sky potential. This interview was on Ausbiz on 10 May, 2021.
Host: Tell us about Next Science. Why is this stock on your radar right now?
Jason: Next Science is a speculative stock with the potential to be a spectacular success. That said, it could also quickly fizzle out — as I said, it’s speculative.
The company has a market cap of around $340 million. It’s not in the All Ordinaries (the top 500 stocks), so it naturally doesn’t have much coverage.
I hadn’t heard of Next Science until recently. It only came to my attention via Motion Trader’s algorithmic scans. As you probably know, Motion Trader covers practically every ASX company, so it often finds stocks that few people know about. And as is so often the case, momentum uncovers some of the most interesting stories.
Have a look at the chart:
You’ll that see I’ve marked some key points on the chart. The blue circle is when the moving averages become positive. The upward break was then the trigger for the buy signal. Motion Trader’s strategy is to buy as prices are rising and then let profits run until the shares hit the trailing stop loss.
So what does Next Science do?
Well, the company develops technologies to reduce the impact of biofilm infections. Biofilm are microorganisms like bacteria. And they’re a major source of infection during surgery.
The company has three products in the US market. And they’ve just received approval from the Food and Drugs Administration for a new product that prevents surgical site infections.
Management says the company’s addressable market is worth $15 billion annually. So there’s a big opportunity if they can fully commercialise their technology.
And they’re making progress…
Over 150,000 people have been treated with the company’s products during the last three years. I believe this could give them a valuable foothold to expand the business.
On the financial side, revenue was down 12.9% last year. Much of this was due to fewer elective surgeries because of COVID. Revenue had been trending up in previous years.
The company had a smaller loss last year, but it still lost $11.9 million. This opportunity isn’t without risk. But their technology appears to have a lot of potential.
Management also has a meaningful stake in the business. In situations like these, it’s always good to see that the people behind the business own shares themselves.
We could be hearing a lot more about Next Science in the months to come.
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I'm Jason McIntosh, the creator of Motion Trader. My career began in 1991 on the trading floor at Bankers Trust. Nowadays, I trade my own systems from home in Sydney.
Motion Trader is for investors who value robust analysis, data driven entry and exit signals, commentary, and education. I use engineered algorithms to identify when to buy and sell ASX stocks. No biases or guesswork, just data driven signals.