Nanosonics: Shares Remain Undervalued

We maintain our AUD 4 fair value estimate and earnings estimates for narrow-moat Nanosonics. The shares trade at a 27% discount to our fair value estimate, as our view that recent earnings headwinds will be largely temporary differs from the market's view. Recent profitability has been negatively affected by hospital capital budget constraints, abnormally low ultrasound procedural volume, and Nanosonics investing in its next major product, Coris, ahead of its expected launch in fiscal 2025.