Seeking Alpha: Novadaq Technologies Knocked Back, But A Large Opportunity Remains

In prior pieces on small-cap med-tech Novadaq Technologies (NASDAQ:NVDQ) I've warned investors that emerging med-tech stories don't have smooth, seamless ramps and that this stock's exceptionally high valuation (at least on the short-term outlook) was an invitation to volatility. That has all come home to roost, as the shares that were once 68% above the price where I wrote on them as a Top Idea are now 2% below that level and down about 5% from my more recent piece in May.

I remain a believer in the technology and the market opportunity for Novadaq. There are literally hundreds of thousands of procedures (if not millions) every year where Novadaq's imaging technology makes clinical and economic sense, and with revenue potential of hundreds of dollars per procedure the numbers can get big pretty quickly. Competitive entries seem inevitable (though Intuitive Surgical (NASDAQ:ISRG) has gone unchallenged for a while now) and the company has to navigate an increasingly contentious end to its relationship with LifeCell. Even with those risks, I remain bullish on these shares and believe a fair value in the high teens is reasonable.

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Novadaq Technologies Knocked Back, But A Large Opportunity Remains