Nanosonics Limited (ASX: NAN) stock is falling following its results released this week, but one analyst says the shares are severely undervalued.
The $1.4 billion life sciences company on Monday reported full-year revenue of $198.6 million, up 14% in constant currency terms, with the installed base of its Trophon ultrasound technology increasing 6% to 37,000 devices.
There was also 20% growth in consumables and services revenue to $146.1 million.
Chief Executive Officer, Michael Kavanagh, said FY25 was a year in which the company "continued to lay the foundations for our next growth horizon".
"With a large cumulative installed base of 37,000 units, up 6% year on year, we are seeing this foundation translate into significant recurring revenue growth," he said.
"Total revenue for the year reached $196.8 million, a 17% increase, driven by a 9% rise in capital revenue to $52.5 million and 20 per cent growth in recurring revenue to $146.1 million.
"This performance underscores the growing value of our recurring revenue business, which is fuelled by installed base and product expansion."
Nanosonics' net profit after tax came in at $20.7 million, up 59%.
New product rollout imminent
Mr Kavanagh said the year was also notable for the development of the next generation of Trophon, "which supports our market leadership in ultrasound probe reprocessing", and the clearance by the United States Food and Drug Administration of its CORIS endoscope system.
"The CORIS system is designed to deliver a new standard of care for the cleaning of flexible endoscopes by addressing recognised issues associated with current manual processes," he said.
"With over 60 million flexible endoscope procedures conducted annually across the top seven key markets alone, CORIS represents a substantial opportunity for the organisation.
"While we remain mindful of broader macroeconomic uncertainties, we are confident in our ability to continue our leadership and growth in ultrasound probe reprocessing with our latest generation Trophon and the expansion of our portfolio and revenue streams with the full commercialisation of CORIS in time."
Analyst bullish on Nanosonics
Analysts at Wilsons Advisory maintained their overweight rating on the stock following the result, with a price target of $6.39, compared with the $4.50 the stock was changing hands for on Wednesday.
"This FY25 result and the accompanying FY26 guidance boiled down to a 'Trophon flex' from Nanosonics," Wilsons said.
"Having upgraded that business through the course of FY25, we assess Trophon is targeting another 13% standalone EBIT growth with margin expansion in FY26."
Nanosonics said it expected a $4m direct impact from United States tariffs, however there were various strategies it would be using to mitigate the impact on net profit, including "reasonable price adjustments over time".
The company issued FY26 guidance of $215 million to $223 million in revenue, up 8% to 12% over FY25.
