Dundee selects Novadaq as top pick

Calling Novadaq Technologies (TSX:NDQ) its “top pick” in the healthcare sector, Dundee Securities analyst David Martin figures the medical devices company can “at least triple revenues by 2012.” He rates the stock a “buy, speculative risk,” with a 12-month price target of $7.10. The stock closed at $3.50 on Friday, with a 12-month trading range of $2.05 to $4.61.

Mr. Martin cites two near-term drivers for his revenue forecast: increasing traction for Novadaq’s SPY technology in plastic reconstructive surgery and the expected launch of SPY fluorescence imaging on Intuitive Surgical’s (NASDAQ:ISRG) da Vinci surgical robot.

“With SPY approved in major markets for most applications, we believe regulatory/technology risk is low,” he writes.

Among other near-term drivers, Mr. Martin points to at least one large SPY study led by a top U.S. reconstructive surgeon that should be published in the coming months; Novadaq’s margins, which should increase materially as SPY revenues eclipse low margin TMR Heart Laser revenues; the potential to sign partners and/or distributors for SPY cardiac and plastic/GI this year; and the commercial launch of SPY Scope expected in 2011.