While some brokers maintain valuation concerns, the
-Revenue growth of 3% in FY21, while profit fell -15%
-Second half average consumables revenue rose strongly
-Potential revenue from new product to match Trophon?
-Independent review shows a rising addressable market
-Costs estimated to rise by 25% in FY22
The company manufactures and distributes the fully automated system called trophon2 for disinfecting ultrasound probes and its associated consumables and accessories. It is also involved in the research, development and commercialisation of infection control and decontamination products.
There was a strong recovery in both capital device and consumables sales, confirming elective procedures are returning despite the ongoing pandemic. Consumable sales had been significantly affected due to restricted hospital access.
On results day, the share price responded with gusto to upgraded guidance and details of the next major product which has been much anticipated for over two years. The new Coris platform for automated endoscope cleaning is scheduled to launch in 2023.
Some features of the FY21 result included a 3% rise in revenue to
There was a 24% increase in average consumables revenue per installed device in the second half, while the installed base itself increased by 20% in second half compared to the first. The US continues to be the major market, generating 86% of group revenues and accounting for the vast majority of the group's global installed base.
Management has guided to double digit revenue growth and a gross margin of around 75%.
Addressable market grows
An independent review of the ultrasound market in the US resulted in an increase in the estimated total addressable market (TAM) to 60,000 units from 40,000. This implies
A review of the European and rest of the world (ROW) markets has not been undertaken but is assumed by management to be understated.
Following the strong second half performance, Morgans thinks it likely that installed base growth of 2,700 to 3,000 units is a reasonable forecast moving forward. The broker increases its target price to
Outlook
The increase in consumables revenue per device in the second half drives
The broker, not one of the seven stockbrokers monitored daily on the FNArena database, lifts its price target to
After costs fell short of management's guidance in FY21, management has predicted they will lift by nearly 25% in FY22 to
New product
The company expects to enter the flexible endoscope re-processing market, potentially in 2023, with its new technology "Nanosonics Coris". It is a completely new approach to high level disinfection of these devices.
While too early to place clear metrics on the opportunity,
Wilsons, also not one of the seven, drives home the importance of the new product by assigning
As a result the broker raises its rating to Market-Weight from Underweight and lifts its target price to
FNArena's database has four broker ratings with one Buy ratings, two Holds and a Sell with a consensus target price of
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