Here’s why Nanosonic shares are crashing 37% today

Nanosonics Ltd (ASX: NAN) shares are on the slide on Wednesday morning.

At the time of writing, the ASX 200 stock is down 37% to a 52-week low of $2.76.

Why are Nanosonics shares sinking?

Investors have been selling the infection prevention company’s shares today in response to the release of a trading update after the market close on Tuesday.

According to the release, the company has continued to experience ongoing uncertainty associated with the impact on the timing of capital unit sales due to hospital capital budgetary pressures. Management explained:

During the first half of FY24, the pipeline for new installed base and upgrades continued to grow however timeframes to conclude sales increased resulting in lower capital sales than expected. In particular, this saw the Company experience softer than anticipated upgrade sales with customers extending the use of their existing trophon equipment, delaying the trophon2 upgrade capital purchase.

What does this mean for sales and profits?

Nanosonics is expecting total revenue for the half year is expected to be approximately $79.6 million. This represents a 2.4% (4.3% in constant currency) decrease compared with prior corresponding period.

Also heading in the wrong direction was the ASX 200 stock’s operating expenses, which are expected to be approximately $60.8 million for the half. This represents an increase of 12% compared with prior corresponding period. Though, this includes investments being made in preparation for the commercialisation of its new endoscope reprocessing platform, CORIS.

The sum of the above will be a profit before tax of approximately $4.9 million. This is less than half of the $11.4 million recorded in the prior corresponding period..

FY 2024 guidance

Looking further ahead, management revealed that it is currently reviewing its second half sales outlook. However, it anticipates revenue growth in second half over the first half, as well as revenue growth for the full year.

It plans to provide more detail on its guidance with its half year results late next month.

In the meantime, the ASX 200 stock warns:

All guidance is subject to ongoing uncertainty in relation to hospital capital budgetary pressures as well as broader economic and geopolitical conditions. All the forward looking information included is inherently uncertain, and the Company cautions against reliance on any forward-looking statements.

Nanosonics shares are now down almost 45% over the last 12 months.

The post Here’s why Nanosonic shares are crashing 37% today appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Nanosonics. The Motley Fool Australia has positions in and has recommended Nanosonics. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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