At US$128, Is Novanta Inc. (NASDAQ:NOVT) Worth Looking At Closely?
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While Novanta Inc. (NASDAQ:NOVT) might not have the largest market cap around , it saw a significant share price rise of 24% in the past couple of months on the NASDAQGS. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Novanta’s outlook and value based on the most recent financial data to see if the opportunity still exists.
Is Novanta Still Cheap?
Novanta appears to be overvalued by 34% at the moment, based on our discounted cash flow valuation. The stock is currently priced at US$128 on the market compared to our intrinsic value of $95.22. This means that the opportunity to buy Novanta at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Novanta’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
See our latest analysis for Novanta
Can we expect growth from Novanta?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Novanta's earnings over the next few years are expected to increase by 65%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has well and truly priced in NOVT’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe NOVT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on NOVT for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for NOVT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.