Top broker gives its verdict on the Nanosonics (ASX:NAN) share price

A new product launch has been announced. Does this make it a buy?

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The Nanosonics Ltd (ASX: NAN) share price was out of form on Monday despite announcing a new product launch.

The infection prevention company’s shares fell over 2% to $5.84.

What did Nanosonics announce?

After years of promising new product launches, Nanosonics has announced a new product called AuditPro.

AuditPro is a digital platform that has been designed to improve traceability, reporting, and compliance of infection prevention measures for medical devices.

The first application will focus on a solution for the ultrasound market, with potential for the new product to be coupled with every ultrasound console at point of care. This complements its industry leading Trophon EPR disinfection system for ultrasound probes.

Management notes that the product will generate new revenue streams associated with a mobile scanning device and subscription-based software that provides real time access for customers to necessary infection prevention compliance data.

Does this make the Nanosonics share price good value?

Analysts at Goldman Sachs have been looking over the new product and have given their verdict.

Goldman said: “Whilst we do not expect the direct revenue streams to be material in the initial year(s), we expect an indirect benefit from the potential to drive adoption of trophon2 (including upgrades from trophon EPR since AuditPro will only be compatible with the newer platform). As a device which actively encourages HLD utilisation, it may also be effective at improving the demand for consumables.”

And while this is positive, it isn’t enough for a change of rating just yet. Goldman continues to believe that the Nanosonics share price is fully valued at the current level.

In light of this, the broker has retained its neutral rating and $5.30 price target. This compares to the latest Nanosonics share price of $5.84.

Though, it has hinted that it will reconsider its recommendation when further R&D updates are released.

Goldman explained: “Management stated that further R&D updates will be provided throughout FY22E (we will look for further colour at the FY21 earnings announcement in mid-August). We expect updates/views on these new products to be a large focus of the market over the coming quarters.”

Should you invest $1,000 in Nanosonics right now?

Before you consider Nanosonics, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Nanosonics wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor 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 has recommended Nanosonics Limited. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. 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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