Novadaq Technologies (NASDAQ:NVDQ) is a good case in point as to why buying high-multiple med-tech stocks early in their life cycle can be very dangerous. Novadaq has actually been executing well, but concerns about disruptions to sales, a different revenue model, competition, and long-term adoption trends have pounded the stock back down into the single digits - down 30% over the past year and down around 60% from the all-time high.
I don't want to create the impression that Novadaq's success is assured, because it most certainly isn't. Doctors can be shockingly resistant to change, and there is always the risk of a better mousetrap down the line. That said, I think it's pretty interesting that a company that should generate more than $100 million in revenue in 2017 (at a 30% year-over-year growth rate) would be trading below 4.0x that 2017 revenue on an EV/revenue basis (and under 5.0x estimated 2016 rev) when high-growth med-techs routinely get multiples of 6.0x or higher.
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Novadaq Technologies Growing, But The Market Doesn't Care