[Click eStock] "Expansion of Medical AI Inevitable... Focus on Overseas Expansion"

by Kim Daehyun

Published 23 Sep.2024 08:25(KST)

Shinhan Investment Corp. noted on the 23rd that the "medical artificial intelligence (AI)" sector has seen “a favorable macroeconomic environment created by factors such as turning profitable, overseas expansion, and the base interest rate cut.”

On the same day, Lee Byunghwa, a researcher at Shinhan Investment Corp., stated, “This is a period when uncertainties surrounding medical AI-related stocks are being removed.” The top preferred stocks are Lunit and Vuno.

[Click eStock] "Expansion of Medical AI Inevitable... Focus on Overseas Expansion"

In particular, overseas market expansion is expected to determine valuation (the stock price level relative to corporate value). The researcher said, “Considering at least a 10-fold reimbursement rate and the large market size, overseas expansion is not an option but a necessity. Most medical AI companies have completed preparations such as obtaining U.S. Food and Drug Administration (FDA) approval. We expect stock price increases mainly for companies that have secured practical sales strategies.”

The U.S. base interest rate cut has also eased valuation pressure on growth stocks. From 2022, the high interest rate environment lasted for about two years, creating unfavorable conditions for growth stocks like medical AI companies, but the Federal Reserve (Fed) began cutting rates this month.

The top preferred stocks are Lunit and Vuno. The researcher emphasized, “Lunit is expected to expand U.S. sales through the acquisition of Volpara. In the long term, when Lunit Scope, which finds biomarkers using AI, is commercialized, it will be possible to assign a completely different sales scale and valuation.” He added, “Vuno is expected to turn profitable in the fourth quarter of this year. There are multiple growth drivers within the year, including DeepCAS FDA approval and additional adoption by the Big 4 hospitals.”

He also maintained a positive view on Seeas Technology and JLK. The researcher added, “After bottoming out due to last year’s high interest rate environment and concerns about monetization, we expect earnings and stock prices to trend upward starting around the end of the year.”