Is the Nanosonics (ASX:NAN) share price a buy?

The Nanosonics Ltd (ASX: NAN) share price is currently trading approximately 25% lower than its 52-week high.

Is this a buying opportunity for investors? I thought I would take a closer look to find out:

The good.

Nanosonics' trophon EPR product is a best in class disinfection system for ultrasound probes. Over the last few years, the company has been growing its installed base at a consistently strong rate.

So much so, at the end of FY 2020 it had grown its installed base by 13% over the 12 months to 23,720 units. This is positive for two reasons. The first is the revenue it generates from unit sales, the second is the sales it then generates from the consumables it requires.

This means that as its installed base grows, so too do the recurring revenues from consumables. For example, full year consumables and service revenue was up 36% to $70.1 million in FY 2020. This now accounts for approximately 70% of its total revenue.

Another reason to be positive is the increased awareness of infection prevention because of the pandemic.

Management commented: "The COVID-19 pandemic has reinforced the importance of infection prevention and given increased prominence to this important topic, not just amongst the medical community but in all communities. The Company considers that this can only be positive for the longer term fundamentals of the business."

The bad.

For several years now, Nanosonics has been promising to release new products targeting other unmet needs with similar addressable markets.

Given its great reputation, distribution channels, and expertise, the market has been very excited about these new products and have been using them to justify the premium its shares trade at. At present, Nanosonics' shares are changing hands for 127x FY 2019 (pre-COVID) earnings.

However, these new products just keep getting pushed further and further back.

After first promising a new product back in FY 2017, according to Goldman Sachs, the latest estimate is now FY 2022.

Management explained: "Commercialisation of the new technology is no longer expected to be in FY21 but will likely be in FY22, with the ultimate launch timing continuing to be dependent on the necessary technical milestones being met as well as the timing of individual market regulatory approvals."

My concern is that if the market starts to doubt this latest estimate, it could begin to take these products out of the equation, causing a significant de-rating of its shares.

The verdict.

While the delays are disappointing, I think it could still be worth buying and holding Nanosonics' shares for the long term.

However, due to the premium its shares trade at and management's habit of missing deadlines, I would suggest investors restrict an investment to just a small part of a balanced portfolio.

After which, when things become more certain, investors could consider increasing their holding.