What Does Novanta Inc.'s (NASDAQ:NOVT) Share Price Indicate?

Novanta Inc. (NASDAQ:NOVT), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$184 and falling to the lows of US$149. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Novanta's current trading price of US$149 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Novanta’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Novanta

What's The Opportunity In Novanta?

The stock is currently trading at US$149 on the share market, which means it is overvalued by 35% compared to my intrinsic value of $110.87. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low 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.

What does the future of Novanta look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Novanta's earnings growth are expected to be in the teens in the upcoming year, indicating a solid future ahead. This should lead to 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.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. At Simply Wall St, we found 1 warning sign for Novanta and we think they deserve your attention.

If you are no longer interested in Novanta, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.