While investing in proven ASX blue-chip stocks and diversified ASX ETFs can reduce volatility, some investors may also monitor ASX small-caps with large potential upside.
One such ASX small-cap that Bell Potter believes is worth keeping an eye on is Cyclopharm Ltd (ASX: CYC).Â
Company overview
Cyclopharm is a medical device company operating in the specialist field of nuclear medicine.
The main revenue driver is Technegas – a system indicated for functional lung imaging.
The primary use of Technegas is diagnosis of pulmonary embolism in patients contra indicated for a CT scan. The product was approved for use in the United States in September 2023.
Investing in small-cap healthcare stocks like Cyclopharm is a high risk, high reward play.
These types of companies often sit on a single product or technology that, if successfully commercialised or approved in a major market, can scale rapidly and generate outsized returns.
Key catalysts to monitor are regulatory approvals or clinical results. These can sharply re-rate valuations.
In Cyclopharm’s case, the appeal lies in having an already commercialised product with recurring revenue potential and a major growth runway in the US.
The bear case, however, is just as important.
Small-cap healthcare is inherently risky due to heavy reliance on one product, execution challenges in new markets, regulatory uncertainty, and the constant need for capital, which can dilute shareholders.
This volatility has been on full display this year for Cyclopharm shares, as it has fallen 26% year to date.
Bell Potter’s view
In a new report from Bell Potter, it seems the broker is leaning more towards the bull case.
The broker said the pace of deployment for Technegas generators in the US has begun to increase.
Cyclopharm Ltd installed six new devices in the first quarter of 2026, with at least 15 more expected by 30 June 2026.
It previously took 21 months to reach 50 devices after pricing changes began in July 2024. However, the next 50 installations are expected to be completed much faster, within six to eight months from April 2026.
Total installations are forecast to reach around 65 devices by the end of June.
Growth expected to lift
Bell Potter also noted a February 2026 capital raise at $0.95 per share increased cash to roughly $20 million.
Cash burn in the second half of 2025 was $9.8 million and is expected to have peaked. Additionally, growth in the US is projected to lift gross margins toward 80%, up from around 55%.
We anticipate the company reaches breakeven at ~310 installed Technegas systems in the US, generating A$19m in revenues.
Elsewhere, Technegas has been explicitly recognised in draft guidelines issued by the two leading professional bodies in the US for nuclear medicine for ventilation perfusion and specifically for the assessment of pulmonary embolism This a significant item – recognition in guidelines for US healthcare providers is compliance matter which hospital operators take extremely seriously.
Strong upside for this ASX small-cap
Bell Potter has retained its buy recommendation for Cyclopharm shares.
However the broker has reduced its price target to $1.00 (previously $1.50) following earnings downgrades and dilution from the recent capital raise.
From yesterday’s closing price of $0.725, this indicates an upside potential of 38%.
The post Down 26% year to date, is it time to buy low on this ASX small-cap? appeared first on The Motley Fool Australia.
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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.