Senseonics Holdings Inc

Senseonics Holdings Inc (NYSEAMERICAN: SENS) is a Health Care Equipment & Services Company. The Company is engaged in the business of designing, developing and commercializing glucose monitoring systems.

Investment Highlights - Senseonics Holdings Inc – Expensive at USD 4.76

• The Company’s performance was impacted by the covid-19 pandemic, reflecting lower revenue and liquidity position for the period.
• The Company has a negative ROE (return on equity) in the third quarter of FY2020. The ROE remained in the negative zone for the last 4 years.
• As per valuation metrics, Price/Earnings multiple of the Senseonics Holdings Inc is currently higher as compared to the corresponding multiple of the Biotechnology & Medical Research industry, reflecting overstretched valuations.
• From the technical standpoint, 14-day RSI is in the overbought zone and is supporting downward movement (around 73 level), which means the stock price could decline in the short term.

Key Risks

• Failure in cybersecurity and a critical data breach could hamper the operation as well as the reputation of the company.
• The Company’s operations are impacted by risks related to market trends, political change and change in the regulatory authority.

Recent News

On 01-February 2021, Senseonics Holdings announced that its partner Ascensia Diabetes Care, as a part of strategic partnership, has started the sales and marketing  of Eversense® XL in Key European Markets

Financial Highlights – Q3 and 9M FY2020 (30 September 2020) (released on 9 November 2020)

(Source: Quarterly Report, Company Website) 

• In the third quarter and nine months period of the financial year 2020, due to lower revenue from the US and outside the US businesses, the total revenue declined to USD 767 thousand and USD 1,064 thousand, respectively.
• The net loss in the third quarter of FY2020 increased, while net loss for nine months period declined.
• The cash balance as on 30 September 2020 declined to USD 26,192 thousand (31 December 2019: USD 95,938 thousand).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Valuation Methodology: EV/Sales Approach (NTM) (Illustrative)

Conclusion

The Company has shown a decline in financial performance in the third quarter of the financial year 2020. Both the top-line and the bottom-line performance declined, while profitability for the period remained in the negative zone. Senseonics Holdings liquidity position declined and reported a poor balance sheet. The Company’s operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening its balance sheet and reducing its costs to preserve cash. The stock made a 52-week low and high of USD 0.3497 and USD 5.56, respectively.

Based on the factors highlighted above, we believe the stock of Senseonics Holdings Inc is “Expensive” at the closing price of USD 4.76 (as on 17 February 2021), with support from few catalysts needs to be evaluated at a later stage such as benefits of started commercial product sales in Key European Markets by Strategic Partner.

*All forecasted figures and Peer information have been taken from Refinitiv, Thomson Reuters.

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