Results trigger swings in Nanosonics' and M2's share prices

It’s been a topsy-turvy day for small caps as investors couldn’t quite make up their minds about Nanosonics’ (NAN) and M2 Group’s (MTU) interim results.

Nanosonics, which has developed a more effective disinfection device for ultrasound probes, released half year numbers that showed it was on track to deliver a maiden profit this financial year but its share price sold off 3.7% to 78 cents on first trade, before recovering to end flat.

M2 Group experienced the opposite, with the stock jumping around 10% to a 6-month high of $6.93 in early trade only to be sold off to finish 2.6% in the red at $6.45 despite reporting pleasing organic growth, an issue that has been dogging the stock.

The relative illiquidity of Nanosonics may have contributed to the dip and those who were brave enough to step in to buy have done well given that sales of its trophon EPR in the United States more than doubled to $8 million from $3 million in the six months to end December as its exclusive distribution partner in the US, GE Healthcare (GEHC), stepped up efforts to sell the units to hospitals and clinics.

This sales momentum is likely to continue, especially since the units are also starting to gain sales traction in the United Kingdom through Nanonics partnership with Toshiba and GEHC.

Total revenue jumped 119% to $9.7 million, which left Nanosonics with an operating loss of $3.5 million. Analysts are expecting the $213 million market cap company to post a full year 2013-14 net profit of $482,000.

Meanwhile, enthusiasm for M2 waned as the group committed a sacrilegious act of disappointing on the dividend front.

While M2 reported good organic growth with 50,000 new contracts signed across its many acquired businesses for the first half of the year, it “only” declared a 15% increase in interim dividend to 11.5 cents a share.

This throws into doubt M2’s full year dividend expectations as it will need to pay a final dividend of 14.2 cents a share.

It also doesn’t help that its half-year earnings were shy of consensus estimates. Sales jumped by 66% to $506 million as earnings before interest, tax, depreciation and amortisation (EBITDA) increased 38% to $75.8 million compared with analysts’ expectations of $532.7 million and $90.5 million, respectively.

Management has given a 2013-14 guidance with sales tipped to come in between $970 million and $1.03 billion and EBITDA to hit $150 million to $170 million.

Brokers have pegged their full year forecasts at the top of the guidance range, but are now likely to trim their estimates tomorrow.