Nanalysis Scientific Corp.'s (NSCI:TSX.V; NSCIF:OTC; 1N1:FSE) Q3/25 financial results were soft for the second consecutive quarter, reported Dr. Douglas Loe, managing director and analyst at Leede Financial Inc., in a Nov. 25 research note. Accordingly, Leede reduced its target price on the Canadian analytical instrumentation developer and service provider by 44%.
"We will maintain our Speculative Buy for now based on management commentary that initiatives are in place to improve [Security] Services' gross margin and visibility on benchtop nuclear magnetic resonance (NMR) system sales in Q4/25 is favorable, but we are revising our price target from CA$0.90 to CA$0.50 to reflect our revised expectations on timelines to achieving sustainable profitability on both EBITDA and cash flow," Loe wrote.
178% Return Implied
At the time of Loe's report, Nanalysis' share price was about CA$0.18 per share (CA$0.18/share). From that price, the return to Leede's new CA$0.50/share target price on the company is 178%.
Leede believes Nanalysis can achieve this return imminently, Loe wrote. To do so, the company must, one, re-establish NMR capital sales momentum and two, more importantly, boost its Security Services' gross margin to levels at or above those generated by the Capital Equipment division.
Nanalysis has 114.8 million shares outstanding. Its market cap is CA$20.7 million (CA$20.7M). Its 52-week range is CA$0.17–0.38/share.
Review of Q3/25 Financials
Loe presented and discussed Nanalysis' Q3/25 financial results, highlighting that EBITDA and consolidated revenue both showed "measurable softness." As for EBITDA, it was negative in Q3/25 and in Q2/25, at (CA$0.2M) and (CA$0.5M), respectively. In comparison, Q3/24 EBITDA was positive at CA$0.3M, and the company maintained EBITDA momentum through Q4/24E.
The analyst added that the company's financial risk in these three mentioned quarters was "essentially similar" because EBITDA at any of these levels is not enough to fund fixed financial costs the firm incurs in the service of its long-term debt that was CA$15.3M last year and CA$17M at the end of the trailing quarter.
As for Nanalysis' Q3/25 consolidated revenue, it was CA$9.3M. This was lower than Q2/25 and Q3/24 revenue of CA$9.6M and CA$10.6M, respectively.
By geography, revenue from Canada was CA$7M, from the U.S. CA$1.7M and from Europe CA$0.3M, in Q3/25. Sales in Europe were a big contributor to Nanalysis' overall Q3/25 softness. In Q3/24, revenue from Europe was much higher, at CA$2.2M, in comparison.
Nanalysis' Q3/25 operating cash flow was negative at (CA$0.4M), well below its peak of CA$1.8M in Q4/24. Because the company historically has generated strong Q4 cash flow, Leede expects EBITDA and cash flow to improve during the current quarter, Q4/25.
NMR Sales Down
The segment that contributed most to Q3/25 softness, Loe noted, was benchtop low-field NMR sales, revenue from which amounted to CA$2.7M. This was lower than Q2/25 sales revenue of CA$2.9M, also soft, and less than half of the historical high of CA$5.5M achieved in Q4/23 and Q4/24.
"We anticipate sequential improvement on year-end NMR capital sales once reported," Loe wrote.
Some evidence from Nanalysis' NMR peers indicates that the analytical equipment purchasing environment is soft in ways that inevitably impact NMR system sales. For instance, Oxford Instruments Plc (OXIG:LSE) reported a 22.9% decline in operating income in H1/25. Its operating margin fell to 13.3% in H1/25 from 17.3% in H1/24. Oxford cited order disruption as the main reason for margin softness in its Imaging and Analysis division.
"Oxford's financial performance in our view reflects on rationale for why Nanalysis' recent quarterly financial data is correspondingly soft," Loe wrote.
Security Services Margin Low
Security Services performed well by historic standards and recorded the highest quarterly revenue of CA$6.6M, as compared to CA$5.6M in Q2/25 and CA$5.4M in Q3/24. Further, the division's Q3/25 gross margin was up sequentially to 12.5% from 9.8% in Q2/25, but it was down from 14.6% in Q3/24. These figures are not good enough, however, Loe wrote.
"Regardless, all of these gross margin levels are well below the 30–40% level that a services operation should be able to achieve to justify its existence within a capital equipment manufacturing/marketing framework," Loe wrote. "Our investment thesis assumes that focused cost containment can lift service gross margin to that level before conclusion of our forecast period."
Favorable Outlook
Despite Nanalysis' Q3/25 financial results, Leede believes benchtop NMR platforms can and will grow market share in the global analytical equipment universe, as other chromatographic and spectroscopic tools have done, Loe wrote.
Also, Leede believes that if Nanalysis aggressively contains costs and pursues logistical efficiencies in its Securities Services operations, primarily its contract with the Canadian Air Transport Security Authority, or CATSA, the scientific equipment company can lift this division's gross margin to more than 30%, and EBITDA accretion should follow.
"We do expect NSCI shares to trade sideways until clear evidence of sustainable gross margin/EBITDA growth transpires, but our investment thesis projects that this trend can begin as early as the present quarter (Q4/25)."
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Disclosures for Leede Financial Inc., Nanalysis Scientific Corp., November 25, 2025
Disclosures None Important Information and Legal Disclaimers Leede Financial Inc. (Leede) is a member of the Canadian Investment Regulatory Organization (CIRO) and a member of the Canadian Investor Protection Fund (CIPF). This document is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investing strategy. Data from various sources were used in the preparation of these documents; the information is believed but in no way warranted to be reliable, accurate and appropriate. All information is as of the date of publication and is subject to change without notice. Any opinions or recommendations expressed herein do not necessarily reflect those of Leede. Leede cannot accept any trading instructions via e-mail as the timely receipt of e-mail messages, or their integrity over the Internet, cannot be guaranteed. Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. All securities involve varying amounts of risk, and their values will fluctuate, and the fluctuation of foreign currency exchange rates will also impact your investment returns if measured in Canadian Dollars. Past performance does not guarantee future returns, investments may increase or decrease in value, and you may lose money. Leede employees may buy and sell shares of the companies that are recommended for their own accounts and for the accounts of other clients. Disclosure codes are used in accordance with Policy 3600 of CIRO. Description of Disclosure Codes 1. Leede and its affiliates collectively beneficially own 1% or more of any class of equity securities of the company as of the end of the preceding month or the month prior to the preceding month if the report was issued prior to the 10th. 2. The analyst or any associate of the analyst responsible for the report or public comment hold shares or is short any of the company's securities directly or through derivatives. 3. Leede or a director or officer of Leede or any analyst provided services to the company for remuneration other than normal investment advisory or trade execution services within the preceding 12 months. 4. Leede provided investment banking services for the company during the 12 months preceding the publication of the research report. 5. Leede expects to receive or intends to seek compensation for investment banking services in the next three months. 6. The analyst preparing the report received compensation based upon Leede investment banking revenues for this issuer within the preceding 12 months. 7. The director, officer, employee, or research analyst is an officer, director or employee of the company, or serves in an advisory capacity to the company. 8. Leede acts as a market maker of the company. 9. The analyst has conducted a site visit and has viewed a major facility or operation of the issuer. 10. The company has paid for all, or a material portion, of the travel costs associated with the site visit by the analyst. Dissemination All final research reports are disseminated to existing and potential institutional clients of Leede Financial Inc. (Leede) in electronic form to intended recipients thorough e-mail and third-party aggregators. Research reports are posted to the Leede website and are accessible to customers who are entitled to the firm’s research. Reproduction of this report in whole or in part without permission is prohibited. Research Analyst Certification The Research Analyst(s) who prepare this report certify that their respective report accurately reflects his/her personal opinion and that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views as to the securities or companies. Leede Financial Inc. (Leede) compensates its research analysts from a variety of sources and research analysts may or may not receive compensation based upon Leede investment banking revenue. Canadian Disclosures This research has been approved by Leede Financial Inc. (Leede), which accepts sole responsibility for this research and its dissemination in Canada. Leede is registered and regulated by the Canadian Investment Regulatory Organization (CIRO) and is a member of the Canadian Investor Protection Fund (CIPF). Canadian clients wishing to effect transactions in any designated investment discussed should do so through a Leede Registered Representative. U.S. Disclosures This research report was prepared by Leede Financial Inc. (Leede). Leede is registered and regulated by the Canadian Investment Regulatory Organization (CIRO) and is a member of the Canadian Investor Protection Fund (CIPF). This report does not constitute an offer to sell or the solicitation of an offer to buy any of the securities discussed herein. Leede is not registered as a broker-dealer in the United States and is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. Any resulting transactions should be effected through a U.S. broker-dealer.
Rating Definitions Buy The security represents attractive relative value and is expected to appreciate significantly from the current price over the next 12-month time horizon. Speculative Buy The security is considered a BUY but carries an above-average level of risk. Hold The security represents fair value and no material appreciation is expected over the next 12-month time horizon. Sell The security represents poor value and is expected to depreciate over the next 12-month time horizon. Under Review The rating is temporarily placed under review until further information is disclosed. Tender Leede Financial Inc. recommends that investors tender to an existing public offer for the securities in the absence of a superior competing offer. Not Rated Leede Financial Inc. does not provide research coverage of the relevant issuer.
Rating Distribution RECOMMENDATION NO. OF COMPANIES % Buy 7 41% Speculative Buy 7 41% Hold 2 11% Sell - - Tender 1 7% Under Review - -
