Why the Nanosonics (ASX:NAN) share price fell 8% in May

The Nanosonics share price struggled in May. We take a closer look at what happened.

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The Nanosonics Ltd (ASX: NAN) share price struggled in May.

During the month, the healthcare technology company’s shares shaved off 8%.

What happened to the Nanosonics share price in May?

Unfortunately for Nanosonics’ shareholders, weakness in the healthcare sector broadly doesn’t appear to be the fault. In fact, the S&P/ASX 200 Health Care Index (ASX: XHJ) outpaced the broader market, delivering a return of 3.5% in May. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) climbed 1.9%.

The disappointing month for Nanosonics might be due to the absence of catalysts. During May, the only announcements from the company pertained to a change in director’s interests. CEO, Michael Kavanagh exercised his performance rights to acquire 342,735 shares in Nanosonics.

Without any new information, investors could still be focusing on the decrease in first half revenue. Total revenue for H1 FY21 fell 11% year-over-year following a reduction in purchases by GE Healthcare due to COVID-19.

Looking forward

While the first half looked to be challenging for the company, it instilled confidence for the second half. Further vaccination rollouts and improved access to hospitals formed the basis of the optimistic outlook.

Referring to Nanosonics’ second half expectations, Mr Kavanagh said:

Based on current market improvements the company is anticipating ongoing growth in total revenue and profitability into the second half, driven by increasing installed base growth and increased usage of consumables across all regions.

However, this statement was made back in February. Since then, Australia has suffered vaccination rollout issues and additional lockdowns. This has potentially made investors uneasy regarding a second-half rebound.

Healthcare shares that had a better month

May was a good month for the large-cap ASX-listed healthcare shares. For example, CSL Limited (ASX: CSL) added 7% as data indicated a rise in foot traffic at plasma collection centres. Furthermore, Hearing device maker Cochlear Ltd (ASX: COH) rose 2% during May, with Macquarie analysts giving it a $245 price target.

Will June be a better month for the Nanosonics share price, or will the large-cap trend continue? Shareholders will be watching eagerly.

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Mitchell Lawler 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. and CSL Ltd. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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