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Byron Capital ups Novadaq price target

March 7, 2012 by · Leave a Comment 

Byron Capital Markets has raised its 12-month price target on “buy-rated” Novadaq Technologies (NASDAQ:NVDQ; TSX:NDQ) to $12 from $11 after the company received an out-patient reimbursement code from the U.S. Centers for Medicare & Medicaid Services (CMS).

The CMS decision puts in place a “clear mechanism by which SPY utilization in out-patient surgery – wound care and minimally-invasive surgeries/laparoscopies are examples – can be driven by both medical and economic incentives,” writes analyst Doug Loe, adding that reimbursement should “enhance SPY adoption in relevant markets.”

He said the out-patient surgical market for Novadaq’s SPY Imaging is as attractive and growing as the in-patient hospital market, collectively generating well over one million procedures per year, “in which real-time SPY imaging can improve outcomes.”

Mr. Loe’s valuation is based on net present value, using multiples of 20 times EPS and 12.5 times EV/EBITDA on fiscal 2014 forecasts, with a discount rate of 20%, down from 25%.

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