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 a double-digit share price rise of over 10% in the past couple of months on the ASX. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Nanosonics’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Nanosonics

What Is Nanosonics Worth?

The stock is currently trading at AU$4.57 on the share market, which means it is overvalued by 23% compared to my intrinsic value of A$3.71. This means that the opportunity to buy Nanosonics at a good price has disappeared! 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.

Can we expect growth from Nanosonics?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. 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. At this current price, shareholders may be asking a different question – should I 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 positive outlook is encouraging for NAN, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Nanosonics, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 1 warning sign for Nanosonics and you'll want to know about it.

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.