I watch what could be one of the most undervalued company on the open market have its stock price continues to drop full percentages almost every day. On April 4th the stock hit a high of $24.09. Two months to the day (tomorrow) the price will open around $13.71 (closing price 06/03/14). Down 43%! I thought it was high at $24 but not 43% high. The institutions are absent by and large based on volumes and types of trades for the last few weeks. I was told a few days ago there were approximately 3 million shares shorted out of 55 million. With this many shares (about 10-14 days average volume 270k) I would think shorts would be loath to pile up much more. Does someone know there is an unannounced threat to NVDQ's technology? Does someone have knowledge that the ongoing marketing initiative of PINPOINT and/or LUNA is not going well?
I remember back in 2008 ISRG dropped from $357 to $87 in a few months! I was befuzzeled back then too. It later rose to over $600 before it was beset by rumors, false law suites, and a prominent news casters twisted negative presentation on Bloomberg. Back then I wish I had a $ Billion. I would have purchased 25% of ISRG and returned 6 fold in 3 years. Today I would take that same $ Billion and buy 80% of Novadaq!
If anyone has a theory or even reasonable guesses as to an explanation for the precipitous drop in NVDQ over the last 60 days please reply to this.
Hi AG, I wonder when the new daVinci will have an approved firefly? After all 50% of the installed Novadaq devices were driven by daVinci. While not a large revenue driver, I imagine the firefly is still substantial enough to impact the high growth rate projections that Novadaq has. I wonder how much of the current sales at ISRG are the new Xi. These sales of Xi are without firefly I presume since it is not yet approved.
Good point Bharat, I do not expect any new Xi sales though there could be ~20-40 retrofits to existing SI and S models. I have been monitoring the Da Vinci doctors and newly listed sites. I expect this will be the low for ISRG results. Doctors are down about 30% from last quarter and they are a pretty good secondary indicator of system sales.
A couple of points. I find your comment that you have recently learned that short interest on Novadaq has reached 3 million shares worrisome. That is a 700,000 shares increase since 5/15 and it occurs after the stock has already declined by 40%. While it is true that many companies the size and type of Novadaq have been trashed over the past two months, I have always tried to not underestimate the folks that are taking a position opposite mine. In that respect, the only fundamental I can readily think of that they know something about that I don't is the current status of the marketing effort. Were the initial sales just low hanging fruit and the marketing effort has now stalled? That, imo, is the only fundamental issue that could cause such a substantial drop in the pps.
The second point is the volume yesterday. It was over 400 thousand shares and we were down. That much volume on a stock that is 80% owned by Institutions indicates that institutional selling continues. Given the size of the company, there are a number of institutions with very large positions. JP morgan Chase come to mind. I remain convinced that one or more of these institutions is making a significant reduction in their exposure. The $64 dollar question remains, do these institutions know something we don't ?
One thing that could help us get some clarification is the fact that this month the company will be making several investor presentations. If they indicate that they remain on course to grow revenues by 40% a year, the bleeding could finally end. Right now, it is a heck of a situation.
Secondary Sales Squeeze Investors
Slide in Technology, Health-Care Stocks Has Burned Those Who Bought Into Follow-On Offerings
A piece in today's (June 3, 2014) WSJ by Matt Jarzemsky may answer our questions. ( Just google the headline/author to read it if Yahoo disallows the link). Novadaq has been caught in a web of institutional selling, not particularly relating to Novadaq, but rather because of its status as a highflier in the med/tech space. This initially caused the selloff of similar companies, but has since continued because of nervousness by institutions who lost money buying IPOs and secondary offerings. That the bad news. The good news is that Novadaq's fundamental story is 100% intact and getting stronger. In time this draft(hurricane) will subside, and the stock will once again trade on its amazing fundamentals.
Sentiment is everything, and it changes all the time.
Keep the faith!