New York, NY - February 22, 2013 (www.investorideas.com newswire) Taglich Brothers released an updated research report on Novadaq Technologies Inc. (NVDQ) and reiterated a Buy rating with the 12-month price target lowered to $11.60 per share from $13.25 due to reduced sector and stock valuations. The report noted the following key investment considerations:
Reconstructive, cardiac and urological surgery markets have been penetrated to an extent that has made Novadaq cash flow positive. Novadaq aims to commercialize, on its own, the PINPOINT endoscopic imaging systems for minimally invasive surgeries.
Novadaq will burn cash through mid-2013 due to heavy spending on PINPOINT development and commercialization. But fortified with $37 million in proceeds from a common stock offering, Novadaq is well prepared for expanded product development and penetration of additional large markets.
In 4Q12 (results released Feb. 7, 2013) Novadaq broke even (before warrant revaluations) on revenue of $6.8 million. We projected a ($0.02) per share loss on revenue of $6.5 million. In the year-earlier quarter, the company lost ($0.03) a share (before warrant revaluations) on revenue of $5 million.
Revenue gains stemming from increases in SPY installations and utilization rates should enable Novadaq to narrow losses and achieve positive cash flow in 2013.
For 2013 we project a loss of ($0.04) per share on revenue of $34.2 million. We project 2014 EPS of $0.16 per share on revenue of $46.8 million. Our estimates exclude warrant valuation adjustments.
Novadaq has commercialized SPY Imaging, a patented visualization technology that enables surgeons to monitor circulation and tissue perfusion intraoperatively, facilitating surgical mapping and revisions during major procedures. The technology can also visualize lymphatic systems, potentially detecting the extent of lymph node involvement in cancer cases, and differentiate between normal and cancerous tissue on the margins of a surgical resection.
Recent studies have demonstrated improvements in surgical outcomes, reductions in post-operative complications and cost savings stemming from the adoption of fluorescence angiography. These results should underlie wide acceptance of Novadaq's SPY systems, which are adaptable for use in a wide variety of major surgeries. SPY systems have so far been used widely in post-mastectomy breast reconstruction and coronary artery bypass graft procedures. Variants of SPY have been developed for use in urological, gastrointestinal, and organ transplant procedures. The technology has also been refined by Novadaq for use in a number of open, minimally invasive, and robotic surgical procedures.
Novadaq's growth strategy is based in part on strategic partnerships, the first of which, with Intuitive Surgical, could potentially boost revenue substantially in 2010.
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