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June 10, 2013 by stephenkilmer ·
Janney Capital Markets has initiated coverage of Novadaq Technologies (NASDAQ:NVDQ; TSX:NDQ) with a “buy” rating and fair value estimate of $20, saying the company’s SPY Imaging System is an imaging technology platform that provides significant clinical benefits in both open and minimally invasive surgeries (MIS). The stock closed up $0.91 at $14.51 on Monday.
With profitability around the corner, and little competition present in the market, we believe two-three quarters of super growth could be enough catalyst for a substantial upside,” writes analyst Spencer Nam.
“With recent launch of Novadaq’s PINPOINT imaging system, a fluorescence imaging technology, for endoscopic MIS, we expect Novadaq’s revenues to rapidly grow from $23-million in 2012 to potentially exceeding $180-million by 2017,” he added.
He figures the company’s cost structure will likely support a profitable operation by the first half of 2014. “Although Novadaq’s share price has substantially appreciated since early 2013, we believe there is more upside potential to the story as the Street has yet to account for potential impact from PINPOINT,” he added.
Noting that Novadaq’s partnerships with major medical device and instrument companies validate the SPY Imaging technology, he said the company’s entry into MIS via PINPOINT is a “significant growth opportunity that we believe the Street has yet to fully embrace.”
Mr. Nam said the Street’s conservative modeling, coupled with Novadaq’s aggressive growth trajectory, could lead to pleasant surprises in growth trajectory in the near-term. “Furthermore, with SPY Imaging technology being superior to the existing line-up of endoscopes, we also view that Novadaq could be an attractive take-out candidate (possible valuation at least $1-billion).”