Nanosonics headwinds temporary, shares undervalued: Morningstar
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The news: Morningstar has flagged that shares in ASX-listed medical equipment maker Nanosonics are undervalued, with the company's recent earnings headwinds seen as "largely temporary".
The numbers: Morningstar maintained its fair value estimate for Nanosonics at $4. Shares in the company were up 0.7% to $3 in early trading on the ASX.
Equity analyst Shane Ponraj noted that Nanosonics shares have declined by around 20% since October — about a 25% discount to Morningstar's unchanged fair value estimate.
The context: Ponraj said that Nanosonics' recent earnings headwinds such as hospital budgetary constraints, abnormally low ultrasound procedural volumes, and investment for Nanosonics' pipeline product are mostly temporary.
Morningstar also expects the company's next major product, Coris — which aims to automate flexible endoscope cleaning — to launch in Australia and Europe in late FY25 and in the US in early FY26. Ponraj said the uptake of Coris should represent 24% of group revenue by FY34 and see annual sales grow to $100 million over the next decade.
The source: Morningstar research
