Novanta (NOVT) AI Stock Analysis

• Market Cap: $4.14B
• Dividend Yield: N/A
• Average Volume (3M): 348.63K
• Price to Earnings (P/E): 70.8
• Beta (1Y): 1.67
• Revenue Growth: 6.34%
• EPS Growth: -1.57%
• Country: US
• Employees: 3,000
• Sector: Technology
• Sector Strength: 91
• Industry: Hardware, Equipment & Parts
• EPS (TTM): 0.76
• Shares Outstanding: 35,973,633
• 10 Day Avg. Volume: 544,657
• 30 Day Avg. Volume: 348,629
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.23
• Enterprise Value/Revenue: 5.33
• Enterprise Value/Gross Profit: 11.90
• Enterprise Value/Ebitda: 28.66
• 1Y Price Target: $131.50
• Price Target Upside: 9.37% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 67 Neutral
• Price Target: $130.00 ▲(8.13% Upside)

Novanta's strong financial performance and positive earnings call insights are offset by technical indicators suggesting bearish momentum and a high valuation. The company's growth prospects are promising, but current market conditions and valuation concerns present risks.

Positive Factors

Acquisitions

The acquisition of Keonn is expected to contribute significantly to Novanta's revenue and EBITDA.

Earnings

Novanta reported a solid second quarter with revenue, EBITDA, and EPS above consensus expectations.

Strategic Partnerships

Management announced a major design win with a 'leading e-commerce and warehouse robotics' company.

Negative Factors

Guidance

Novanta suspended 2025 revenue and EPS guidance due to extreme uncertainty from tariffs.

Sector Exposure

The administration’s proposed 44% cut to the NIH’s budget is considered ominous news for Novanta.

Trade Tariffs

The escalating trade war with China could also result in a greater-than-expected headwind for Novanta.

Novanta Business Overview & Revenue Model

Company Description

Novanta Inc. is a global provider of precision photonics and motion control solutions, serving a diverse range of industries including medical technology, industrial automation, and scientific research. The company specializes in designing and manufacturing advanced components such as lasers, optics, and motion systems that enhance the performance of equipment used in applications like surgical procedures, industrial manufacturing, and laboratory testing. Novanta's commitment to innovation and quality positions it as a key player in the rapidly evolving technology landscape.

How the Company Makes Money

Novanta generates revenue primarily through the sale of its precision components and systems, which cater to various high-growth markets. Key revenue streams include the direct sale of products such as laser systems, optical components, and motion control solutions, as well as service agreements and support for its installed products. The company benefits from long-term relationships with major original equipment manufacturers (OEMs) and end-users, which often lead to repeat business and ongoing contracts. Additionally, Novanta invests in research and development to drive innovation, ensuring its products meet the evolving needs of its customers, thereby enhancing its competitive edge and revenue potential. Strategic partnerships with leading technology firms and participation in key industry events also contribute to its brand visibility and market penetration.

Novanta Financial Statement Overview

Summary

Novanta demonstrates strong revenue growth and operational efficiency, with healthy margins and a solid balance sheet. However, the decline in free cash flow growth and slight pressure on net profit margins in the TTM indicate areas for improvement.

Income Statement

Novanta's income statement shows strong revenue growth over the years, with a notable TTM (Trailing-Twelve-Months) revenue growth rate of 54.5%. Gross profit margins are consistently healthy, hovering around 44-45%. However, net profit margins have slightly declined in the TTM, indicating some pressure on profitability. EBIT and EBITDA margins remain robust, reflecting efficient operational management.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio, which has improved over the years, indicating better financial leverage management. Return on equity has slightly decreased in the TTM, suggesting a need for improved profitability. The equity ratio remains stable, showing a solid capital structure.

Cash Flow

Cash flow analysis reveals a decline in free cash flow growth in the TTM, which could be a concern for liquidity. The operating cash flow to net income ratio is below 1, indicating potential cash flow constraints. However, the free cash flow to net income ratio remains strong, suggesting efficient cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	956.88M	949.25M	881.66M	860.90M	706.79M	590.62M
Gross Profit	428.54M	421.55M	399.90M	378.47M	300.33M	244.52M
EBITDA	177.85M	179.86M	164.16M	160.99M	126.49M	98.07M
Net Income	61.36M	64.09M	72.88M	74.05M	50.33M	44.52M
Balance Sheet
Total Assets	1.51B	1.39B	1.23B	1.24B	1.23B	865.18M
Cash, Cash Equivalents and Short-Term Investments	109.91M	113.99M	105.05M	100.11M	117.39M	125.05M
Total Debt	513.41M	471.00M	404.56M	489.38M	493.40M	255.05M
Total Liabilities	709.62M	642.81M	552.60M	663.63M	706.59M	388.37M
Stockholders Equity	801.45M	745.70M	673.46M	577.59M	521.29M	476.81M
Cash Flow
Free Cash Flow	117.86M	141.35M	100.11M	71.14M	74.65M	129.72M
Operating Cash Flow	131.39M	158.51M	120.08M	90.78M	94.63M	140.24M
Investing Cash Flow	-71.55M	-208.19M	-19.89M	-42.54M	-306.70M	-13.16M
Financing Cash Flow	-51.82M	56.94M	-97.85M	-60.15M	204.75M	-84.36M

Novanta Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 120.23
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOVT, the sentiment is Negative. The current price of 120.23 is below the 20-day moving average (MA) of 120.66, below the 50-day MA of 124.58, and below the 200-day MA of 138.65, indicating a bearish trend. The MACD of -2.04 indicates Negative momentum. The RSI at 48.74 is Neutral, neither overbought nor oversold. The STOCH value of 40.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NOVT.

Novanta Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CGNX	77 Outperform	$7.17B	59.76	8.10%	0.74%	10.14%	57.53%
VNT	76 Outperform	$6.18B	16.04	35.63%	0.24%	1.16%	0.98%
MKSI	75 Outperform	$6.73B	25.47	11.12%	0.87%	4.47%	2887.37%
PLXS	74 Outperform	$3.53B	22.28	12.12%	―	2.31%	48.63%
ESE	69 Neutral	$4.78B	41.73	9.01%	0.17%	10.65%	15.22%
NOVT	67 Neutral	$4.14B	70.79	8.16%	―	6.34%	-1.57%
Sector *	61 Neutral	$36.02B	6.70	-7.25%	1.99%	8.63%	-7.76%

Novanta Corporate Events

Novanta Announces Departure of General Counsel

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.

Novanta Secures $1 Billion Credit Facility Agreement

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.

Novanta Announces Restructuring Plan to Streamline Operations

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.