The Nanosonics share price has doubled in 12 months: Is it too late to invest?

The Nanosonics Ltd (ASX:NAN) share price hit an all-time high on Tuesday, meaning it has now more than doubled in value in 12 months…

| More on:
a woman

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

Although the market has dropped lower again on Tuesday, that hasn't stopped the Nanosonics Ltd (ASX: NAN) share price from racing higher.

In fact, the infection control specialist's shares climbed almost 3% today to hit an all-time high of $5.02.

When its shares reached that milestone, it meant they had risen a massive 108% since this time last year.

Why is the Nanosonics share price at an all-time high?

The majority of the company's share price gain has come in 2019 following the release of an impressive half year result.

In the first half of FY 2019 Nanosonics achieved sales of $40.7 million, which was an increase of 36% on the prior corresponding period.

This solid top line growth was driven by increasing demand for its best-in-class trophon EPR product and strong sales of the consumables the product uses.

Capital revenue was up 11% on the prior corresponding period to $16.4 million and consumables and service revenue increased 59% on the prior corresponding period to $24.3 million. The latter reflects the continuing growth in the installed base, which at the end of the period had grown 20% since the same time last year to a total of 19,310 units.

Whilst this sounds like a large number, management estimates that it has an addressable market of 120,000 units. This means it has captured only 16% of its addressable market, which I believe gives it a significant runway for growth.

Is it too late to invest?

Whilst this strong share price rally over the last 12 months means that Nanosonics' shares are changing hands at a lofty 115x estimated full year earnings, I still think it would be a great long term investment.

Especially given how the company is building a pipeline of potential new products with a goal of introducing a range of new products over time commencing with the first by the end of FY 2020, subject to regulatory approval.

If these products are half as successful as the trophon EPR offering, then Nanosonics is likely to have a very bright future ahead of it.

Overall, I see it as a great long-term investment in the healthcare sector along with CSL Limited (ASX: CSL) and Pro Medicus Limited (ASX: PME).

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Nanosonics Limited. The Motley Fool Australia has recommended Nanosonics Limited and Pro Medicus Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on 52-Week Highs

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
52-Week Highs

13 ASX 200 shares at 52-week highs

These shares are making their shareholders smile on Thursday.

Read more »

Man raising both his arms in the air with a piggy bank on his lap, symbolising a record high.
52-Week Highs

These 5 ASX 200 shares just hit new 52-week highs

Do you own any of these five lucky stocks?

Read more »

ETF on white blocks with a rising arrow on top of coin piles.
52-Week Highs

12 ASX ETFs breaking the mould to hit 52-week highs today

What a day for ASX ETF investors!

Read more »

A happy boy with his dad dabs like a hero while his father checks his phone.
52-Week Highs

Why is the A2 Milk share price up 46% year to date and at a 52-week high?

This infant formula company's shares have delivered the goods this year.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Travel Shares

Why is the Webjet share price racing to a 52-week high today?

Webjet has been busy talking up its WebBeds business this morning.

Read more »

Man pointing at a blue rising share price graph.
Financial Shares

Big ASX news: Macquarie share price hits new 52-week high

It's been a great day to own Macquarie shares...

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
52-Week Highs

Metcash share price hits 52-week high on broker upgrade: Time to buy?

Brokers have responded positively to its trading update.

Read more »

a woman sits amid a stylish home setting on a sofa with plush cushions with a coffee table and plant in the foreground while she peruses a tablet device.
52-Week Highs

52-week high! ASX All Ords stock surges 5% as chair steps down

Investors are shopping for Adairs shares after an announced leadership change.

Read more »