In line with expectations, Mauna Kea's ("MKEA") reported a 30% YoY decrease in H1 revenues to €3.2m, reflecting the disruption from the ongoing COVID-19 pandemic. Consumables and system sales were most heavily impacted because of the significant drop in procedure volumes (see our note from July 2020) and reduction in demand for new systems which impacted both direct and distributor sales channels. However, MKEA reported that it expects a bounce back in sales for Q3 & Q4/2020E as a combination of pent-up demand for elective procedures and new sales growth drive a recovery in H2. This is reflected in preliminary YoY sales growth expectations between 2% and 11% for Q3/2020E. We view the chances of renewed and extended interruption to procedure volumes as unlikely, thus do not believe that the ongoing second wave of infection will heavily impact MKEA's recovery in this regard, while the generation of further positive clinical evidence for Cellvizio such as the recent endorsement by SAGES should continue to drive adoption. We maintain and reiterate our OUTPERFORM recommendation and target price ("TP") of €3.10.
