Mauna Kea reported 9M/2019 sales of €5.7m (+24% YoY) on track to reaching our FY2019 revenue estimate of €8.6m. Q3 sales decreased by 7% YoY to €1.8m, driven largely by an increased commercial focus on clinical over pre-clinical sales. As such, performance in Q3 is in line with the strategic priorities set out by management for 2019, with clinical sales accounting for 99% of Q3/2019 total sales vs. 75% in Q3/2018. As we expected, Q3 revenues from Cellvizio straight sales and services declined 32% and 27%, respectively, as a result of the increased focus on utilisation, and this decline was partially offset by a 26% increase in consumables sales, highlighting management's strong execution capabilities in driving utilisation of Cellvizio in the US as well as other target geographies. Low utilisation of pay-per-use ("PPU") systems still represents a main risk, in our view, but we continue to believe that the new PPU model will translate into sustainable future growth. We maintain and reiterate both our OUTPERFORM recommendation and €4.10 target price.
