Panmure Gordon has initiated coverage on NetScientific PLC (AIM:NSCI) with a 'buy' recommendation and a price target of 137 pence, hailing its shift away from traditional venture capital (VC) investment models towards a focus on deep technology and life sciences sectors.
NetScientific, under the leadership of CEO Dr Ilian Iliev since 2020, has evolved to support innovation and growth in these sectors, the broker said.
The company’s strategy includes syndicating third-party investments and offering advisory services to its portfolio companies. These services generate additional revenue, helping offset the costs of managing the platform, Panmure said.
Its assets under management (AUM) have grown substantially, from approximately £12 million in 2020 to over £100 million. This advance is a mix of direct investments and managed third-party holdings, the broker said in its initiation report.
A key aspect of NetScientific's strategy is its focus on areas such as artificial intelligence (AI), robotics, semiconductors, materials science, and life sciences. This approach marks a departure from traditional VC investments in software as a service (SaaS), digital-only models, and fintech, Panmure said.
A notable example of NetScientific’s strategic shift is the recent deal between its subsidiary EMV Capital and Cambridge-based Martlet Capital. This transaction significantly increased AUM and is expected to enhance revenue opportunities and support future fund launches.
As NetScientific continues to execute its strategy, it leverages its exposure to high-barrier-to-entry businesses across various subsectors. This diversification presents numerous opportunities for value creation.
Panmure Gordon’s valuation of NetScientific at £32.8 million, or 137p per share, represents a 98% potential upside from current levels.
In afternoon trading the stock was up 1% at 70.9p.