Is Now The Time To Look At Buying Nanosonics Limited (ASX:NAN)?

Nanosonics Limited (ASX:NAN), might not be a large cap stock, but it saw significant share price movement during recent months on the ASX, rising to highs of AU$6.51 and falling to the lows of AU$4.85. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Nanosonics' current trading price of AU$5.32 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Nanosonics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Nanosonics

Is Nanosonics still cheap?

Nanosonics appears to be overvalued by 24% at the moment, based on my discounted cash flow valuation. The stock is currently priced at AU$5.32 on the market compared to my intrinsic value of A$4.29. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Nanosonics’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Nanosonics look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Nanosonics' earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in NAN’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe NAN should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on NAN for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for NAN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

It can be quite valuable to consider what analysts expect for Nanosonics from their most recent forecasts. So feel free to check out our free graph representing analyst forecasts.

If you are no longer interested in Nanosonics, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.