It's been a good week for Novanta Inc. (NASDAQ:NOVT) shareholders, because the company has just released its latest annual results, and the shares gained 9.2% to US$173. Novanta reported in line with analyst predictions, delivering revenues of US$882m and statutory earnings per share of US$2.02, suggesting the business is executing well and in line with its plan. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for Novanta from three analysts is for revenues of US$971.9m in 2024. If met, it would imply a meaningful 10% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to step up 10% to US$2.24. Before this earnings report, the analysts had been forecasting revenues of US$934.9m and earnings per share (EPS) of US$2.26 in 2024. There doesn't appear to have been a major change in sentiment following the results, other than the small lift in revenue estimates.
The consensus price target increased 11% to US$173, with an improved revenue forecast carrying the promise of a more valuable business, in time. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Novanta analyst has a price target of US$167 per share, while the most pessimistic values it at US$162. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Novanta is an easy business to forecast or the the analysts are all using similar assumptions.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 10% growth on an annualised basis. That is in line with its 9.4% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 5.3% annually. So although Novanta is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Novanta. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Novanta going out to 2025, and you can see them free on our platform here..
You can also see whether Novanta is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.