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Novanta (NOVT)
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Novanta (NOVT) AI Stock Analysis

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NOVT

Novanta

(NASDAQ:NOVT)

Rating:67Neutral
Price Target:
$138.00
▲(10.73%Upside)
Novanta's overall stock score reflects strong financial performance and strategic growth initiatives, offset by high valuation concerns and mixed technical indicators. The company's proactive approach to overcoming challenges is commendable, yet significant risks from trade tariffs and revenue deferrals remain. Investors should weigh these factors carefully.
Positive Factors
Acquisition Impact
The acquisition of Keonn is expected to contribute significantly to Novanta's revenue and EBITDA.
Market Expansion
Recent commentary from several companies operating in Novanta’s end-markets leads to expectations of continued momentum in the company’s medical and robotics/automation businesses.
New Product Success
New product wins—including increased content in existing customers’ systems, new customer acquisitions, and general success of the next-generation insufflator in the marketplace—should drive growth in 2025.
Negative Factors
Budgetary Concerns
The administration’s proposed 44% cut to the NIH’s budget is considered ominous news for Novanta.
Revenue Risk
There is a perceived risk of $35 million in revenue associated with shipments to China.
Trade War Impact
The escalating trade war with China could also result in a greater-than-expected headwind for Novanta in the near term.

Novanta (NOVT) vs. SPDR S&P 500 ETF (SPY)

Novanta Business Overview & Revenue Model

Company DescriptionNovanta Inc., together with its subsidiaries, designs, manufactures, markets, and sells photonics, vision, and precision motion components and sub-systems to original equipment manufacturers in the medical and industrial markets worldwide. The company's Photonics segment offers photonics-based solutions, including laser scanning and beam delivery, CO2 laser, solid state laser, ultrafast laser, and optical light engine products serving photonics-based applications for industrial processing, metrology, medical and life science imaging, DNA sequencing, and medical laser procedures. It's Vision segment provides a range of medical grade technologies, including medical insufflators, pumps, and related disposables; visualization solutions; wireless technologies, video recorders, and video integration technologies for operating room integrations; optical data collection and machine vision technologies; radio frequency identification technologies; thermal chart recorders; spectrometry technologies; and embedded touch screen solutions. In addition, its Precision Motion segment offers optical and inductive encoders, precision motors, servo drives and motion control solutions, integrated stepper motors, intelligent robotic end-of-arm technology solutions, air bearings, and air bearing spindles. The company sells its products through its direct sales force, resellers, distributors, and system integrators under the Cambridge Technology, Synrad, Laser Quantum, ARGES, WOM, NDS, NDSsi, Med X Change, Reach Technology, JADAK, ThingMagic, Photo Research, Celera Motion, MicroE, Zettlex, Applimotion, Ingenia, and Westwind brands. The company was formerly known as GSI Group, Inc. and changed its name to Novanta Inc. in May 2016. Novanta Inc. was founded in 1968 and is headquartered in Bedford, Massachusetts.
How the Company Makes MoneyNovanta Inc. generates revenue through the sale of its proprietary technology solutions and components primarily to original equipment manufacturers (OEMs) and system integrators. The company's revenue model is centered around its key business segments: Photonics, Vision, and Precision Motion. Each segment comprises an array of products and solutions that cater to specific industry needs, such as laser-based surgical tools in healthcare or precision automation systems in manufacturing. Novanta's growth and earnings are further bolstered by strategic partnerships with industry leaders, acquisitions aimed at expanding its technological capabilities and market reach, and a strong focus on research and development to drive innovation. The company benefits from a global customer base, which contributes to diversified revenue streams and reduces dependency on any single market or client.

Novanta Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q1-2025)
|
% Change Since: 3.85%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
Novanta has demonstrated strong financial performance and strategic growth despite facing significant challenges from trade tariffs and market uncertainties. The company's proactive measures and strategic acquisitions position it well for long-term growth, though short-term challenges remain significant.
Q1-2025 Updates
Positive Updates
Revenue Growth and Strong Cash Flow
Novanta achieved $233 million in revenue for Q1 2025, representing 2% organic growth and 1% reported growth. The company also generated a robust $32 million in operating cash flows, maintaining a streak of strong cash flow conversion.
Successful Product Launches
The company confirmed $50 million of incremental new product revenue for 2025, driven by launches in surgical robotics, minimally invasive surgery applications, and other advanced technologies.
Strategic Acquisition
Novanta completed the acquisition of Keonn, an RFID solution provider, marking the first acquisition of 2025. This aligns with the strategy to expand into AI-enhanced software integrated with proprietary hardware.
Strong Performance in Medical Markets
Advanced Surgery business saw high single-digit growth due to strong patient procedure growth and hospital spending.
Innovative Technology Development
Novanta is making progress in markets like warehouse automation and precision robotics, with strong design win activity and new product sales growing in double digits.
Negative Updates
Impact of Trade Tariffs
Trade tariffs have increased manufacturing costs by approximately $20 million annually, creating significant challenges and necessitating mitigation strategies.
Revenue Deferrals to China
Approximately $35 million in expected revenue from U.S. manufactured products shipping to China has been deferred due to tariffs exceeding 100%.
Challenges in Precision Medicine
The precision medicine business unit faced disruptions from tariffs and funding cuts at the U.S. National Institute of Health, impacting sales.
Volatility in Global Capital Spending
Uncertainty in global trade and U.S. government spending cuts have led to deferred investments, affecting demand visibility, particularly in industrial and life sciences markets.
Company Guidance
During Novanta Inc.'s First Quarter 2025 Earnings Call, the company provided guidance focusing on maintaining its full-year adjusted EBITDA despite current market challenges. Novanta reported $233 million in revenue, reflecting organic growth of 2% and a reported growth of 1%, with adjusted gross margins at 46% and adjusted EBITDA at $50 million. The company achieved a strong operating cash flow of $32 million, marking the eighth consecutive quarter of cash flow conversion above 120% of net income. Novanta also highlighted a strategic focus on ramping new product launches to achieve $50 million in incremental revenue for 2025, driven by innovations in surgical robotics and minimally invasive surgery. The company's diversified business model, with exposure to high-growth medical and advanced industrial markets, is designed to withstand geopolitical and economic volatility. Although current trade uncertainties and tariffs have impacted revenue, Novanta's proactive mitigation strategies and cost containment measures aim to neutralize these effects, ensuring continued financial resilience and growth.

Novanta Financial Statement Overview

Summary
Novanta demonstrates commendable financial health with strong revenue growth, stable margins, and effective cash flow management. The company's balance sheet is stable with moderate leverage, strong equity ratios, and efficient cash conversion, positioning it well within the industry.
Income Statement
85
Very Positive
Novanta shows strong income statement performance with a consistent upward trajectory in revenue, growing from $590.6M in 2020 to $951.7M TTM. Gross profit margins have remained stable, sustaining around 44% in TTM, and EBIT margins are healthy at 12.3% TTM. The net profit margin is 7.4% TTM, indicating a robust bottom line, though slightly lower than previous periods due to increased expenses. Overall, the company demonstrates solid profitability and growth.
Balance Sheet
78
Positive
The balance sheet of Novanta reflects moderate leverage with a debt-to-equity ratio of 0.58 TTM, showing improved equity stability. Stockholders' equity has been increasing, reinforcing the equity ratio at 55.5% TTM, indicating financial stability. Return on equity is strong at 9.2% TTM, showcasing efficient use of equity to generate profits. The balance sheet indicates a healthy financial standing with a good balance of debt and equity.
Cash Flow
80
Positive
Cash flow analysis reveals strong free cash flow generation with a notable $141.5M TTM, reflecting a significant increase from prior years. The operating cash flow to net income ratio is healthy at 2.2 TTM, indicating efficient cash conversion. The free cash flow to net income ratio stands at 2.0 TTM, underscoring effective cash management. While operating cash flow slightly decreased recently, the cash flow position remains strong overall.
Breakdown
Income Statement
Total Revenue
Gross Profit
EBITDA
Net Income
Balance Sheet
Total Assets
Cash, Cash Equivalents and Short-Term Investments
Total Debt
Total Liabilities
Stockholders Equity
Cash Flow
Free Cash Flow
Operating Cash Flow
Investing Cash Flow
Financing Cash Flow

Novanta Technical Analysis

Technical Analysis Sentiment
Positive
Last Price124.63
Price Trends
50DMA
126.55
Positive
100DMA
125.80
Positive
200DMA
143.08
Negative
Market Momentum
MACD
-0.40
Positive
RSI
51.13
Neutral
STOCH
48.95
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOVT, the sentiment is Positive. The current price of 124.63 is below the 20-day moving average (MA) of 128.27, below the 50-day MA of 126.55, and below the 200-day MA of 143.08, indicating a neutral trend. The MACD of -0.40 indicates Positive momentum. The RSI at 51.13 is Neutral, neither overbought nor oversold. The STOCH value of 48.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NOVT.

Novanta Risk Analysis

Novanta disclosed 38 risk factors in its most recent earnings report. Novanta reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Novanta Peers Comparison

Overall Rating
UnderperformOutperform
Sector (50)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$4.93B41.809.66%0.17%8.40%20.03%
75
Outperform
$5.88B16.2035.88%0.25%-3.59%-11.30%
74
Outperform
$6.67B29.659.50%0.88%-1.14%
71
Outperform
$5.72B49.848.02%0.92%8.56%18.99%
68
Neutral
$3.34B20.9712.12%2.31%48.63%
67
Neutral
$4.48B63.769.73%6.52%1.60%
50
Neutral
C$3.11B2.54-63.57%2.26%4.49%-6.15%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
NOVT
Novanta
124.63
-54.75
-30.52%
CGNX
Cognex
34.63
-13.81
-28.51%
ESE
Esco Technologies
190.80
69.42
57.19%
MKSI
MKS
99.50
-18.75
-15.86%
PLXS
Plexus
124.70
-0.43
-0.34%
VNT
Vontier
39.89
1.08
2.78%

Novanta Corporate Events

Executive/Board Changes
Novanta Announces Departure of General Counsel
Neutral
Jul 11, 2025

On July 8, 2025, Novanta Inc. announced that Michele D. Welsh would no longer serve as General Counsel and Corporate Secretary, effective July 18, 2025, or an earlier agreed date. There are no changes to the severance terms outlined in her employment agreement, ensuring continuity in her departure process.

The most recent analyst rating on (NOVT) stock is a Hold with a $160.00 price target. To see the full list of analyst forecasts on Novanta stock, see the NOVT Stock Forecast page.

Private Placements and Financing
Novanta Secures $1 Billion Credit Facility Agreement
Neutral
Jul 2, 2025

On June 27, 2025, Novanta Inc. and its subsidiaries entered into a Fourth Amended and Restated Credit Agreement with several financial institutions, including Bank of America and JP Morgan Chase, to establish a $1.0 billion credit facility. This new agreement replaces the previous credit agreement scheduled to mature in March 2027 and includes a €65.31 million euro-denominated term loan, a $75.0 million U.S. dollar-denominated term loan, and an $850.0 million revolving credit facility, all maturing in June 2030. The agreement allows for an additional $350.0 million increase in commitments under certain conditions and includes various financial covenants and obligations, such as maintaining specific leverage ratios and asset security.

The most recent analyst rating on (NOVT) stock is a Hold with a $160.00 price target. To see the full list of analyst forecasts on Novanta stock, see the NOVT Stock Forecast page.

Business Operations and Strategy
Novanta Announces Restructuring Plan to Streamline Operations
Neutral
Jun 9, 2025

On June 3, 2025, Novanta Inc. announced a restructuring plan aimed at streamlining operations and aligning with long-term goals. The plan includes regionalizing manufacturing, closing certain sites, and implementing cost-saving strategies, with an estimated $20 million to $25 million in pre-tax charges and anticipated annual savings of $20 million once completed. The restructuring is expected to be substantially completed within 18 months, although actual results may vary due to various risks and uncertainties.

The most recent analyst rating on (NOVT) stock is a Hold with a $160.00 price target. To see the full list of analyst forecasts on Novanta stock, see the NOVT Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 26, 2025