In morning trade the CogState Limited (ASX: CGS) share price has been one of the worst performers on the market.
At the time of writing the cognitive science company's shares are down almost 7% to $1.05.
Why have its shares fallen?
This morning CogState released a disappointing full-year trading update which revealed that the strong revenue growth that was seen in the first-half has not been sustained in the second-half.
According to the release, due to delays in the execution of sales contracts, second-half revenue from clinical trials is expected to come in at $16.2 million, a decrease of $2.2 million or 12% from the prior corresponding period.
While this will lead to full-year revenue of $34.6 million and a year-on-year increase of 27%, the market was expecting an even better result following the strong first-half.
Furthermore, as a result of the weaker second-half, management expects the company to post a net loss before tax of approximately $1 million for the year ended 30 June 2017.
Should you buy the dip?
Whilst I am a big fan of the company and believe the growing demand for its technology from pharmaceutical companies could allow it to grow its top line at a strong rate for the foreseeable future, I'm not yet a buyer of its shares just yet largely on valuation grounds.
With a market cap of approximately $128 million and an expected full-year loss of $1 million, I'd only consider investing if its share price fell to a more appropriate level.
In the meantime I would suggest investors consider an investment in fellow medical technology shares Nanosonics Ltd. (ASX: NAN) and Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) instead.