Novadaq Technologies’ Price Target Cut to $13 by RBC

Novadaq Technologies (NVDQ) received a price-target reduction Wednesday from RBC Capital Markets following the medical-device company’s release after Tuesday’s close of preliminary fourth-quarter revenue and 2017 sales guidance that missed analysts’ expectations.

In the disappointing pre-announcement, Novadaq said it expects revenue for the fourth quarter at about $20.2 million, below analysts’ mean estimate at the time according to Capital IQ of $25.4 million; the Street view has since declined to $24.5 million. It forecast 2017 sales in the range of $98 to $102 million, below the Street view at the time of $111.6 million; the Street view has since come down to $107.9 million.

The company’s new price target from RBC is $13 per share, down from $16 but still well above the stock’s trading level; RBC kept its investment rating on the stock at outperform with speculative risk.

The stock closed Tuesday at $7.65 and tumbled 17% in recent pre-market trading to $6.32, which would mark a new 52-week low if it is sustained into the regular session. The stock’s current 52-week low for the regular session is $6.94.

In a note to clients, RBC said weakness in the shares following the guidance was likely, but it also noted “that the focus remains on building a recurring revenue base and improving marketing and reimbursement capabilities.” The firm also highlighted that Novadaq entered into a $60 million credit facility consisting of a term loan and a revolving credit facility, saying that improves the company’s balance sheet.

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