By Michael Kim
NASDAQ:NIVF
READ THE FULL NIVF RESEARCH REPORT
We are initiating coverage of NewGenIVF Group (NASDAQ:NIVF) with a 12-month price target of $15.00, translating into a sizeable upside from the stock’s current price. NewGenIVF Group provides Assisted Reproductive Services (ARS) to couples and individuals across Asia, with four clinics in Thailand, Cambodia, and Kyrgyzstan. Core businesses include In Vitro Fertilization (IVF) treatments and surrogacy services. More recently, the company acquired proprietary technology and related assets to facilitate family balancing/gender selection. Senior officials anticipate deploying medical devices in clinics to capitalize on the massive/high-growth fertility market here in the U.S. Furthermore, management recently acquired a plot of land in Ras Al Khaimah (RAK), the largest city and capital of the Emirate of Ras Al Khaimah, with plans to develop a luxury residential complex as part of a broader strategic initiative to invest, develop, and resell real estate properties across the United Arab Emirates (UAE), thereby further diversifying the company’s business model and revenue profile, while meaningfully enhancing financial performance and growth.
Our investment thesis revolves around:
1. More potent business model: NewGenIVF is in the process of profoundly diversifying the company’s business model, revenue profile, and returns on investments. More specifically, the recent acquisitions of cytometry technology and assets to increasingly penetrate the U.S. fertility services market, along with the company’s real estate development initiative in the UAE position NIVF for a considerable step up in financial performance and growth.
Focusing on the company’s core ARS business, NIVF provides IVF treatments and surrogacy services to couples and individuals across Asia. While related growth is partially a function of opening new clinics and hiring/training new employees, industry tailwinds remain robust including rising infertility rates, particularly across key markets in Asia. From a demographic perspective, the increasing prevalence of same-sex couples and single mothers by choice, as well as more women opting to delay childbirth represent incremental growth drivers for ARS. Furthermore, growing awareness and acceptance of IVF and related services, particularly as it relates to improving success rates and more affordable costs, remain key catalysts in accelerating growth across the ARS market.
Beyond a favorable macro/demographic backdrop, company-specific growth drivers for NIVF include the company’s: a) broad array of ARS capabilities, with market shares continuing to roll up to scale-enabled players offering proprietary technologies; b) high success rate reflecting leading-edge technology, best-in-class physicians, and long tenures working with couples and individuals across Asia; and c) multi-pronged marketing approach focused on social media, referrals, and branding initiatives in addition to increasingly capitalizing on accelerating fertility tourism growth, particularly in Thailand reflecting favorable infrastructure and regulatory backdrops and cost advantages more broadly, as well as the company’s strategic initiatives to target tourists from specific countries by providing tailored services, facilities, and amenities.
2. Introducing proprietary technology in the U.S.: Following the acquisitions of MicroSort Lab Services in addition to related cytometry technology and assets earlier this year, management plans to offer U.S.-based IVF clinics sperm-sorting services to facilitate family balancing/gender selection. Pending regulatory clearance/approval, senior officials anticipate deploying cytometers in clinics to capitalize on the massive/high-growth fertility market here in the U.S. Over time, we look for management to increasingly leverage the company’s MicroSort technology to market gender-related hereditary disease prevention services in other countries.
3. Real estate kicker: In June, NIVF announced plans to invest $45 million to acquire, develop, and resell real estate properties across the United Arab Emirates (UAE), thereby further diversifying the company’s business model and revenue profile, while meaningfully enhancing financial performance and growth. Following suit, the company recently acquired a plot of land in Ras Al Khaimah (RAK), the largest city and capital of the Emirate of Ras Al Khaimah, with plans to develop a luxury residential complex. From a financial perspective, our math suggests project sales exceed $450 million, with net profits of ~$200 million. NIVF is entitled to approximately one-third of the gross sales revenue based on an initial ~$24 million investment.
Stepping back, we view RAK as a prime location for NIVF’s initial real estate venture reflecting a number of key catalysts. First, real estate property values and rental yields continue to rise driven by ongoing investments in infrastructure and hospitality projects across the emirate, as well as a rising supply/demand imbalance following a period of surplus. Second, pricing remains more affordable relative to comparable properties in other emirates – more specifically, Dubai – thereby supporting sustainable demand trends. Third, the number of tourists visiting RAK continues to grow, with a further step up anticipated following the opening of the Wynn Al Marjan Island resort in 2027. Fourth, RAK maintains robust economic trends, strong population growth, and political stability. Moreover, the government remains focused on stimulating investment activity via 100% foreign property ownership, low corporate tax rates and other tax benefits, and long-term visas for investors.
4. Building earnings power: Our model calls for an adjusted net loss per share of $2.19 this year (excludes a $19.2 million Bargain Purchase Gain related to the company’s recent acquisition of cytometry intellectual property and related assets in 2H25, as well as a $4.3 million purchase gain on the acquisition of MicroSort Reproductive Technology in 1H25) followed by adjusted EPS of $1.59 in 2026, $6.35 in 2027, and $11.87 in 2028, as the business continues to scale. Importantly, our 2026 through 2028 EPS estimates are based on 11.7 million shares outstanding (2.2 million at present plus ~9.5 million related to incremental equity offerings, we believe). Key modeling inputs include accelerating revenue growth fueled by sales of the company’s residential real estate development in the UAE (~$455 million spread across 2026, 2027, and 2028) and steady growth in Core IVF services reflecting growing awareness and utilization, ongoing market share gains driven by the company’s high success rate, innovative and accessible fertility services, and building sales and marketing initiatives, and NIVF’s expanding footprint across Asia, North America, and the UAE.
While operating and net income/loss trends have remained uneven since 2023, we forecast a sharp step up in profitability next year and beyond. Despite stepped up marketing, G&A, and compensation costs related to strategic growth initiatives, much of the improvement can be linked to sizeable real estate contributions and meaningful margin expansion, we believe. Beyond operating leverage inherent in the model, much of the step up in profitability can be attributed to rising gross margins, particularly as the revenue mix continues to skew in favor of real estate sales and recurring technology royalty/leasing fees.
5. Valuation disconnect: The stock’s current depressed valuation likely remains a function of limited revenue growth (for the core IVF business), inconsistent profitability trends, and unproven management acumen across newer business initiatives, along with the technical overhang related to a considerable chunk of shares potentially coming to market from selling shareholders and/or further equity capital raises to fund growth. That said, we look for a considerable upward revaluation for the stock, as awareness and appreciation of the company’s diversified business model, accelerating/sustainable growth prospects, competitive positioning, proprietary technology, rising profitability, and valuation disconnect increasingly take hold (particularly assuming a broker-led capital raise). As discussed earlier, we look for a substantial step up in NIVF’s earnings power (fueled by the ramp up of real estate and MicroSort business initiatives), which is clearly not reflected in the stock at current levels. Moreover, co-founders Mr. Siu and Ms. Fong maintain considerable influence on the company (through 100% ownership of NIVF’s Class B shares), thereby reinforcing strong management/shareholder alignment.
In addition to our DCF model, our valuation work typically involves looking at peer valuation multiples for corroboration. As it relates to NIVF, apples-to-apples comparisons remain challenging given the company’s unique business model spanning various projects, revenue/margin profiles, and geographies. Moreover, most publicly-traded ARS/IVF companies remain unprofitable making relative P/E analyses not meaningful. That said, we note Progyny, Inc. (PGNY, Not Rated) and The Cooper Companies, Inc. (COO, Not Rated) – companies providing fertility products and services – are currently trading at 10x to 16x consensus EPS estimates for 2026. As further support, management recently disclosed an independent valuation report from a “Big Four” global accounting firm valued the company’s recently acquired cytometry technology Intellectual Property (IP) at $17.9 million, or well above the stock’s current market cap.
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