Is Margin Pressure Amid Modest Growth Shifting the Long-Term Narrative for Novanta (NOVT)?

• Novanta Inc. recently reported its third quarter 2025 earnings, showing sales of US$247.84 million and net income of US$10.65 million, both compared to higher figures a year ago, while also providing new guidance for the upcoming quarter, full year 2025, and 2026.
• An interesting takeaway is that while sales saw modest growth, net income and earnings per share declined, underscoring pressure on margins even as the company emphasizes future organic revenue growth and new product momentum.
• To assess the impact on Novanta’s investment outlook, we'll examine how softer quarterly profits and updated growth guidance interplay with the company's longer-term narrative.

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Novanta Investment Narrative Recap

To own Novanta stock, investors need confidence that near-term pressures on margins will be offset by the company’s emphasis on innovation and new product momentum within robotics, healthcare, and automation. The latest quarterly update delivered stable revenue but a drop in net profit and earnings per share, which does not materially alter the primary short-term catalyst, ongoing organic growth through design wins, and the key risk remains execution on margin improvement amidst cost and trade challenges.

Among recent announcements, Novanta’s guidance for mid-single digit organic revenue growth in 2026 stands out in context with its third quarter results. The company points to momentum in design wins and new launches as supporting factors, but actual profit conversion and margin stability remain front of mind for investors watching for potential recovery in Precision Medicine and Manufacturing end markets.

By contrast, investors should be aware that persistent cost headwinds and execution risks around manufacturing regionalization could still pressure margins and cash flows as the company works to fulfill its growth narrative...

Read the full narrative on Novanta (it's free!)

Novanta's narrative projects $1.1 billion revenue and $135.3 million earnings by 2028. This requires 5.8% yearly revenue growth and a $73.9 million earnings increase from $61.4 million.

Uncover how Novanta's forecasts yield a $141.50 fair value, a 4% upside to its current price.

Exploring Other Perspectives

Three Simply Wall St Community estimates place Novanta’s fair value between US$36.71 and US$141.50. Amid wide-ranging views on growth, many are closely watching whether profit margins rebound after recent softness.

Explore 3 other fair value estimates on Novanta - why the stock might be worth less than half the current price!

Build Your Own Novanta Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Novanta research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.
• Our free Novanta research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Novanta's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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