The Nanosonics Ltd. (ASX: NAN) share price has fallen into the red this morning following the release of its annual general meeting presentation.
At the time of writing the infection control specialists' shares are down 2% to $2.82.
Why are its shares lower?
Overall I felt the presentation was a positive one and there was little reason for investors to head to the exits today.
Management reconfirmed both its installed base and operational expense guidance.
In North America the company expects continued growth in its installed base at a similar level to the second-half of FY 2017. Nanosonics reported a 15.9% increase in its installed base in North America during the second-half of last year.
It did, however, warn that uncertainty surrounding healthcare reform in the United States could potentially delay the timing of capital purchases.
In Europe the Managed Equipment Service (MES) continues to gain traction. New unit growth in Europe is expected in the range of 75% to 100% in FY 2018, with over 90% of these installations expected to be under MES.
While this will mean the company doesn't receive upfront revenue from the sale of capital equipment, the model is expected to deliver strong annuity returns and drive faster adoption as it helps hospitals in the UK overcome capital budget constraints.
Furthermore, the company could get a boost from new guidelines which are expected in Europe that will support Trophon EPR's entry into new markets.
Finally, management continues to expect operational expense to be $48 million, including $14 million for research and development, in FY 2018 due largely to its expansion into new markets and the development of two new products.
Should you invest?
At 80x estimated forward earnings Nanosonics' shares are certainly not cheap and carry a lot of risk.
But I do believe the reward on offer with an investment in the company makes it worth considering.
After all, despite the rapid adoption of its trophon system, management still estimates that it has only captured 12% of its estimated global market opportunity of 120,000 units.
With the product widely regarded as the best in its class, I feel Nanosonics has a significant runway for growth ahead of it that goes some way to justifying the premium its shares trade at.
In light of this, I would put it up there with CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC) as one of the best growth shares to buy in the healthcare sector.
