Nano-X Imaging (NNOX 0.45%) has been one of the hottest healthcare stocks on the markets this year. It has more than doubled in value after receiving clearance from the Food and Drug Administration (FDA) for its x-ray system. The imaging company is on a positive trajectory.
However, it hasn't always been that way. It's been a bumpy ride for investors since the stock was added to the Nasdaq less than two years ago. Here's a look at how you would have done if you'd bought shares of the company when they were first available.
How the stock has done since 2020
On Aug. 21, 2020, shares of Nanox went public. By the end of the day, the stock was worth $21.70. If you had invested $10,000 at the time, that would have been enough for you to buy approximately 461 shares of the business. The stock's early gains were impressive as it more than doubled in value during the meme hype of 2021.
But the stock would go on to crash to less than $10. This year, it has rallied 160% year to date on the hopes of its Nanox.ARC X-ray system, which obtained 510(k) clearance from the FDA in May, indicating that it is both safe and effective. The system has lots of promise as it uses multiple sources and can form a 3D visualization from a series of 2D projections. The company says it's both cost-effective and user-friendly.
However, even with those recent gains, the stock is still trading at around $19 per share -- down from where it was in August 2020. That $10,000 investment would now be worth roughly $8,800, for a decline of 12%. By comparison, the S&P 500 has risen by 28% during that same time frame.
Nanox's future remains uncertain
There's more excitement surrounding Nanox's stock now that the company has obtained clearance for its multi-source x-ray system. However, this is still a business that has a lot to prove; it isn't generating any revenue from the device, and it could be years before it does.
Meanwhile, it's incurring losses, and it's far too early to tell if it will be able to run a profitable operation -- the company is focusing on providing the devices to customers at affordable prices, and relying on what it calls an "innovative pay-per-scan business model."
Many investors are still betting against the stock, and short interest for Nanox remains high at 13% of its float.
NNOX Percent of Float Short data by YCharts
Is Nanox stock a buy?
If the company's x-ray device proves that it is a better alternative for hospitals and physicians than what they are currently using, there could be some significant upside for Nanox's stock. But until there's some proof of demand, there's still going to be plenty of uncertainty for this business. Simply obtaining clearance that the device is safe doesn't mean sales will be through the roof, and investors should be careful not to read too much into that development.
There are, however, analysts at Cantor Fitzgerald who are bullish on Nanox's prospects. Recently, the financial services firm raised its price target for Nanox stock up to $30. That would suggest an upside of around 60% from where the stock trades now.
But that's arguably not enough of an upside for the potential risk involved with owning the stock. It has taken a while for the business to even get to where it is now, and so unless hype and speculation drive the share price up, I'm not optimistic that Nanox stock can hit that price target based on its own fundamentals. For most investors, this is a healthcare stock worth keeping an eye on, but not buying just yet.
