Sunday, April 20, 2014

JMP starts Novadaq at market outperform

December 20, 2011 by · Leave a Comment 

JMP Securities has initiated coverage of Novadaq Technologies (TSX:NDQ) with an “outperform” rating and 12-month price target of $7. The stock closed at $4.72 on Monday

SPY is a breakthrough imaging system that allows surgeons to visualize blood flow and perfusion in real-time. The company has established partnerships with LifeCell and Intuitive Surgical, which “in our view validates the technology,” analyst J.T. Haresco III writes. “Our diligence indicates that SPY technology can improve surgical outcomes and save money – two key characteristics that we believe could drive adoption in the long-run.”

Novadaq’s SPY technology can be used in cancer treatment, wound care, cardiac surgery, breast reconstruction, and other indications. Mr. Haresco estimates that up to 1.5 million procedures in the U.S. could benefit from using SPY technology on an annual basis. “This translates into a market opportunity of $2.3 billion annually in kit sales alone, excluding hardware or international sales.”

His $7 price target is based on a multiple of 7 times enterprise values/sales on his fiscal 2013 revenue estimate of $36.6 million, discounted by 15%.

“We believe shares of Novadaq should trade at a slight premium to a peer group of high-growth, med-tech comparables (6x EV/S) because the company has a similar high-revenue growth profile with applicability across a wider variety of indications than most of its peers, similar to Intuitive’s Da Vinci” surgical robot,” he added.

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