NanoVibronix Inc (NASDAQ:NAOV), a USD$17.14M small-cap, is a healthcare company operating in an industry, which has experienced tailwinds from issues such as higher demand driven by an aging population and the increasing prevalence of diseases and comorbidities. Moreover, the challenges facing the healthcare equipment in particular, are complex and interrelated. So, care delivery models that use a multi-pronged, collaborative, and technology-enabled approach are more likely to yield positive results. Healthcare analysts are forecasting for the entire industry, a positive double-digit growth of 21.23% in the upcoming year , and an enormous growth of 68.64% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Should your portfolio be overweight in the healthcare sector at the moment? Below, I will examine the sector growth prospects, and also determine whether NAOV is a laggard or leader relative to its healthcare sector peers. See our latest analysis for NAOV
What’s the catalyst for NAOV’s sector growth?
Personalized and data-driven equipment underpins the future advancement and structural shift in the healthcare equipment industry. In the past year, the industry delivered growth in the teens, beating the US market growth of 10.30%. NAOV lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means NAOV may be trading cheaper than its peers.
Is NAOV and the sector relatively cheap?
The healthcare industry is trading at a PE ratio of 42x, above the broader US stock market PE of 22x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a similar 11.31% on equities compared to the market’s 10.06%. Since NAOV’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge NAOV’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? NAOV has been a healthcare equipment industry laggard in the past year. If your initial investment thesis is around the growth prospects of NAOV, there are other healthcare equipment companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how NAOV fits into your wider portfolio and the opportunity cost of holding onto the stock.
Are you a potential investor? If NAOV has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although its growth has delivered lower growth relative to its healthcare equipment peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. Before you make a decision on the stock, I suggest you look at NAOV’s future cash flows in order to assess whether the stock is trading at a reasonable price.
For a deeper dive into NanoVibronix’s stock, take a look at the company’s latest free analysis report to find out more on its financial health and other fundamentals. Interested in other healthcare stocks instead? Use our free playform to see my list of over 1000 other healthcare companies trading on the market.