Hmmm, A Sudden Change Of Heart For This CEO And CFO

Insiders did some holiday shopping last week with robust buying. American Superconductor Corporation (AMSC) almost took this space as our top choice for the week, but NanoString Technologies, Inc. (NSTG) rallied from off the pace as the easy winner for this week’s insider buying pick of the week.

NanoString Technologies is a leading provider of life science tools for discovery and translational research. The company provides three platforms that allow researchers to map the universe of biology.

  • The nCounter® Analysis System, cited in more than 5,000 peer-reviewed publications, offers a way to easily profile the expression of hundreds of genes, proteins, miRNAs, or copy number variations, simultaneously with high sensitivity and precision.
  • NanoString’s GeoMx® Digital Spatial Profiler enables highly multiplexed spatial profiling of RNA and protein targets in various sample types, including FFPE tissue sections, and has been cited in more than 75 peer-reviewed publications.
  • The CosMx™ Spatial Molecular Imager, with commercial availability just starting, enables highly sensitive, high-resolution imaging of hundreds to thousands of RNAs or proteins directly from single cells within morphologically intact whole tissue sections.

NanoString’s Chief Executive Officer (CEO) Gary Bradley and Chief Financial Officer (CFO) Thomas Bailey both made change of heart purchases last week. CEO Bradley bought 67,661 shares at $7.38 for a total investment of $499,373. One day later, CFO Bailey acquired 29,161 shares for $8.05 per share, spending $234,756. (1)

Sometimes, when reviewing insider activity patterns, you come away with a feeling of “something is going on here”. Both Bradley and Bailey never bought NanoString stock, but they’ve both been sellers. In fact, prior to last week, the CEO and CFO did nothing but sell, sell, and sell some more.

Bradley sold 25 times from November 2016 through March 2022, collecting more than $26 million. (2) Bailey’s record is only different in scale. He sold 17 times form August 2019 through March 2022, banking north of $6.8 million. (3)

So, apparently out of nowhere, the two highest ranking officers at NanoString have a major sentiment change simultaneously. As the C C Music Factory song goes, things that make you go hmmmm. We don’t know about you, but a 180 turn for both sets off our “something is going on here” sense.

The most obvious reason for the duo’s newfound enthusiasm could be the company recently announced its first shipments of CosMx™ Spatial Molecular Imager (SMI) and the AtoMx™ Spatial Informatics Platform (SIP). (4)

There is no word on the dollar amount, but Chief Scientific Officer Joe Beechem says, “Over the next several years, scientists will apply our portfolio of spatial biology platforms to understand how cells behave in tissue and to re-write the fundamentals of biology described in our textbooks.”

Wall Street is also upbeat on NSTG’s prospects with a one-year price target of $17.00 (6). It trades at $8.23 as of this writing. Analysts do not see profitability in the foreseeable future but do forecast sales climbing more than 38 percent from $126.12 million in 2022 to $174.83 million in in 2023.

These young, fast growing emerging companies can trade with elevated fundamentals. In the last five years, the medical instruments company traded at an average of 10.16 times sales. Today, its price to sales ratio (P/S) is 2.81, not too far off the peer group’s average of 2.5.

To be fair, NanoString should trade at a premium to its peers. The typical company in the same space is slated to increase revenue by 22 percent in 2023 compared to the aforementioned 38 percent for NSTG.

If the Seattle-based company maintains its current P/S valuation and hits next year’s sales projections, then the stock would trade at $10.83, or 31 percent higher than it is as we type.

OVERALL: (CEO) Gary Bradley and (CFO) Thomas Bailey sentiment changes appear to reflect NanoString Technologies, Inc. (NSTG) positive prospects. Shares have above-average upside at the current P/S ratio if the company meets 2023’s sales target. As an emerging company, NSTG is only appropriate for growth investors with above-average risk tolerance and a time horizon of at least 12-18 months.


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