Narrow-Moat Nanosonics Still Screens As Overvalued

Nanosonics has built awareness of improving high-level disinfection, or HLD, of ultrasound probes as evidenced by trophon market penetration of 77% in Australia and New Zealand and 52% in North America in fiscal 2020. At the end of fiscal 2020, the company had an installed trophon base of 23,720 devices out of an estimated addressable market size of 120,000 globally. However, we expect high market penetration rates to be limited to developed economies which can afford to prioritise nuanced disinfection standards. We expect elevated growth over the next three years as trophon continues to gain share in North America and launch in Japan, followed by slowing growth once the device patent expires in 2025 and the more easily addressable markets are heavily penetrated.