Hargreaves Lansdown investors are buying Polarean Imaging shares. Should I buy too?

Polarean Imaging shares are being snapped up by investors after a big announcement from the company in late December. Ed Sheldon takes a look at the investment case.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Engineer Project Manager Talks With Scientist working on Computer

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Polarean Imaging (LSE: POLX) shares have been getting quite a bit of attention from investors recently. Last week for example, they were among the top 10 most bought shares on Hargreaves Lansdown’s investment platform.

Should I follow the crowd and buy the shares for my own portfolio? Let’s take a look at the investment case.

An introduction to Polarean Imaging

Polarean is a US-based company that operates in the medical imaging research space. As an innovative company, it’s focused on solutions that help with the diagnosis of lung disease.

It specialises in the use of hyperpolarized xenon gas (129Xe) as an imaging agent. Its technology is designed to provide a novel, non-invasive approach to diagnostics and enable MRI systems to achieve an improved level of pulmonary function imaging.

Founded in 2016, Polarean listed on the London Stock Exchange’s Alternative Investment Market (AIM) in 2018 via an Initial Public Offering (IPO). Currently, it has a market-cap of around £120m, meaning it’s a small company.

The company is led by CEO Richard Hullihen, who has more than 30 years’ experience in the medical imaging industry.

Growth potential

Looking at Polarean Imaging today, there are a couple of things that stand out to me. The first is that in late December, the company’s key product, XENOVIEW, was approved by the US Food and Drug Administration (FDA).

XENOVIEW is designed for use with MRI systems for the evaluation of lung ventilation in adults and paediatric patients aged 12 years and older. It can provide pulmonologists, surgeons and other respiratory specialists with ventilation maps of patients’ lungs.

FDA approval is a huge achievement for the company. And it could lead to much higher revenues.

It’s worth noting that at present, the one broker covering the stock expects revenue to hit $9.8m in 2023 versus $1.5m in $2022. That’s a substantial increase.

The second thing that stands out to me is that there are some major name investors on board here. Currently, Amati Global Investors, Chelverton Asset Management (which has a great track record with UK growth stocks), and Aviva are some of the biggest shareholders.

This is all very encouraging and leads me to believe there could be significant investment potential here.

A speculative growth stock

Having said that, this stock is speculative in nature. Polarean is not expected to be profitable anytime soon. For 2023, the company is expected to post a net loss of $14.3m. Generally speaking, unprofitable companies are risky investments. One reason for this is that they are hard to value accurately.

Meanwhile, the company may need to raise capital at some point. Earlier in the year, management said the group had enough cash to last until 2024. However, it is burning through its cash pile. So I would not rule out a capital raising in the not-too-distant future. This could put pressure on the share price.

The size of the company also adds risk to the investment case. Typically, the share prices of companies this size are volatile in nature.

My move now

Given the lack of profits, I’m going to leave Polarean Imaging shares on my watchlist for now. The company does appear to have a lot going for it. However, right now, the shares are just a bit too speculative for my liking.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon has positions in Hargreaves Lansdown Plc. The Motley Fool UK has recommended Hargreaves Lansdown Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

3 essential factors for investors to consider when aiming for passive income success

Mark Hartley outlines three of the most important considerations investors are faced with when attempting to secure a lucrative passive…

Read more »

Investing Articles

£10,000 invested in Barclays shares 1 month ago is now worth…

Barclays shares have carried on where they left off in 2024, by climbing far faster than the FTSE 100. Harvey…

Read more »

Investing Articles

I’ve been watching the easyJet share price like a hawk. Here’s what it did last week

Harvey Jones can't take his eyes off the easyJet share price. He thinks it looks good value and ready to…

Read more »

Investing Articles

A £10,000 investment in Nvidia stock 6 months ago is now worth…

Nvidia stock's shown a lot of volatility for a mega-cap company in recent weeks. Dr James Fox explores how an…

Read more »

Investing Articles

4 reasons Ferrari could continue to be a stock market winner

The global luxury goods market may have struggled in recent years, but you wouldn’t guess that from Ferrari’s soaring stock.

Read more »

Investing Articles

5 perfect starter stocks to consider for a Stocks and Shares ISA in 2025

Wondering which shares to buy for a newly opened Stocks and Shares ISA? Our writer thinks these five investments are…

Read more »

Row of terrace houses.
Investing Articles

Thinking about buy-to-let? Consider these UK stocks instead

Owning UK property stocks could be a better way to invest in buy-to-let, though there are drawbacks. Royston Wild explains.

Read more »

Investing Articles

Here’s a plan to target £7,500 a month in passive income

This writer outlines a roadmap that someone could consider taking to try and aim for a substantial future passive income…

Read more »