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Will the Nanosonics share price surge higher in 2020?

The Nanosonics Ltd (ASX: NAN) share price has been a top performer on the ASX in 2019.

Strong earnings and continued development have seen the company’s shares surge 138% higher since the start of January.

The big question for shareholders is whether or not Nanosonics shares will continue to climb in 2020.

Why the Nanosonics share price has surged higher this year

It’s been a steady ride for Nanosonics shareholders in 2019 with consistent capital gains throughout the year.

The Aussie healthcare group reported a solid half-year result in February before delivering even better in August 2019.

The company’s Capital segment revenue rocketed 28% higher to $32.8 million for the year ended 30 June 2019. The biggest driver was an 18% increase on FY18 in the company’s global installed base to 20,930 units.

It was a similar story in its Consumable and Service segment, which surged 47% to $51.5 million during the year.

Nanosonics’ increased sales bode well for further growth into 2020 and beyond.

Investors agreed, as the Nanosonics share price jumped 32% in one day following the bumper FY19 result. Overall, Nanosonics shares have climbed a whopping 138% since the start of January.

What’s the outlook for 2020?

While you might think you’ve missed the boat on Nanosonics shares, there could still be time to buy.

Nanosonics is well and truly an ASX growth stock – it trades at an astonishing 145x earnings.

This might put you off, given the recent commentary around ASX growth company multiples, but I think the Nanosonics share price can climb higher in 2020.

The company is anticipating similar sales growth for 2020 with North American installations the big target. Investors are also keeping a close eye on the company’s plans for a second clinical disinfection device in the coming months.

I can see some similarities between Nanosonics and bumper ASX Healthcare stock Cochlear Limited (ASX: COH), albeit with a long way to go.

Foolish takeaway

To me, it looks like the Nanosonics share price is set to climb higher in 2020, barring a major market correction. Although I personally wouldn’t be so worried about share price growth, but more about getting bang for your buck given the high earnings multiple.

I’d prefer to turn to blue-chip ASX healthcare stocks like Cochlear or CSL Limited (ASX: CSL) given we’re at the top of the economic cycle right now.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd., CSL Ltd., and Nanosonics Limited. The Motley Fool Australia has recommended Cochlear Ltd. and Nanosonics Limited. 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.

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