Novadaq Technologies, Inc. (NVDQ) Research Update Released
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New York, NY - February 12, 2014 (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 raised to $21.50 per share from $19.50, reflecting estimated 2015 sales. While our projected price-to-sales multiple reflects a high (relative to its comparison group) premium we have lowered it to account for reduced revenue growth momentum. The report noted the following key investment considerations:
Robust sales growth in the years ahead should be driven by sustained placement gains by strategic partners in the reconstructive, cardiac and urological surgical markets, the rollout of SPY-based PINPOINT® and LUNA™ systems, and the adoption of SPY for new indications.
Our 2014 revenue projection is slightly reduced. Strategic partners' sales gains are slowing but a strong rollout of PINPOINT and LUNA systems and increasing utilization of the SPY systems already in service should drive strong revenue growth in 2014 and 2015. We increased our 2014 loss per share projection to ($0.11) from ($0.01) as selling and distribution expenses should be higher than anticipated.
For 4Q13 (results released Feb. 6, 2014) Novadaq reported a loss of $2.7 million, or ($0.06) per share, on revenue of $10.7 million. We projected a 4Q loss of ($0.02) per share on revenue of $10.2 million. In the year-earlier quarter, the company lost ($0.01) a share on revenue of $6.8 million. Despite sharply higher revenue, NVDQ's 2013 loss increased significantly due to heavy selling and distribution expenses.
With $200 million raised through common stock sales since April 2012, Novadaq is exceptionally well funded and is in a strong position to pursue acquisitions and development and commercialization of new SPY applications.
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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