IQ-AI Ltd. is a holding company investing in technologies based on artificial intelligence (AI). Its principal holding makes it one of the few publicly traded ‘pure plays’ in the fast-growing market for artificial intelligence-enabled medical imaging. Imaging Biometrics (IB) based in Wisconsin provides AI-driven software solutions to hospitals and clinics to improve the quality and detail of medical images generated by magnetic resonance (MRI) or computed tomography (CT) imaging systems. IB’s solutions save time and reduce errors in imaging interpretation. IB’s principal revenue generator is IB Clinic, a suite of medical imaging analysis tools for diseases of the soft tissues, particularly brain tumors and cancers.
In our view, IB is at an inflection point. It has successfully commercialized its AI technologies and has built an impressive network of distribution and marketing partners. The top cancer clinic in the U.S. recently adopted its flagship IB Clinic platform, providing arguably the strongest reference in the AI corner of the medical imaging market where no single contender dominates. We believe the path to profitability appears well mapped out with just the current product line.
However, in our view, what is even more interesting is IB’s deep technology development pipeline that in the future could accelerate subscription growth when commercialized and sold to its building customer base. IB benefits from a 95% contract retention rate and has lost only one customer relationship over the last five years. Icing on the cake is IB’s strategic plan to expand into therapeutics. In April 2022, IB began enrollment in a Phase I clinical trial for a gallium maltolate (GaM) compound as a cancer treatment. Earlier clinical trials found low toxicity for GaM, providing encouragement for a successful Phase I trial outcome early next year.
We initiated coverage of IQ-AI Ltd. common stock with a Speculative Buy rating. In our view, at the current share price the Company is undervalued given the earnings potential of the medical imaging technologies already commercialized by its principal holding in Imaging Biometrics as well as IB’s deep pipeline of new products under development. We estimate the intrinsic or current value of IQAI is 6.50 GBp.
In our view, the current share price represents a compelling entry point into long positions for investors with extended investment horizons. Our target price twelve to eighteen months out is set modestly at the stock’s implied intrinsic value of 6.50 GBp, representing 66% upside potential return from the current price level.
We note that investors have two choices for taking a position in IQ-AI Ltd. Its shares are listed on the London Stock Exchange under the symbol IQAI. The Company is a fully reporting public company in the United Kingdom and follows disclosure requirements for London Stock Exchange listed securities. The shares are also quoted in the U.S. equity market as IQAIF on the OTCQB, which lists primarily early-stage and developing companies. That said, IQAIF does not trade consistently every trading session the OTCQB is open.
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