Following Q1 numbers, Byron’s Loe reiterates BUY rating on Novadaq

Byron Capital analyst Douglas Loe says that ramped up marketing expenses aren’t hitting Novadaq’s (Novadaq Stock Quote, Chart, News: TSX:NDQ) bottom line as much as he expected.

Yesterday, before market, Novadaq Technologies reported its Q1, fiscal 2013 numbers. The company lost (U.S.) $2.93-million on revenue of $7.3-million, a topline that was up 53%, year-over-year.

CEO Dr. Arun Menawat said revenue growth was driven by the continued adoption of Spy Elite procedures and higher Firefly system sales to end-users, but that newer products might soon begin to enter the mix.

“The installed bases and recurring revenues for Novadaq’s partnered products continued to grow in first quarter 2013, while at the same time, we also achieved additional early milestones for our new direct products, Luna and Pinpoint,” he said.

Byron Capital analyst says Novadaq’s revenue exceeded his forecast of US$7.1 million. He says the fact that the company was EBITDA positive, if only slightly, during a time when it is launching its PINPOINT product is encouraging. In a research update to clients this morning, Loe reiterated his BUY rating and $14.50 one-year target on Novadaq.

Earlier this month, Novadaq presented interim results from the 150 patient PILLAR™II, (Perfusion Assessment in Laparoscopic Left Anterior Resection), at the 2013 Society of American Gastrointestinal and Endoscopic Surgeons meeting in Baltimore. The company previewed results from 66 of the 150 patients, and none of them showed complications.

Novadaq’s PINPOINT device device, which was used in the study, is a patented optical endoscope that can visually detect a fluorescent dye called indocyanine green. This dye binds tightly to serum albumin, so it can be used to assess tissue perfusion in real time. This ability is potentially useful in many surgical markets, including the colorectal surgery that the study was based on.

Loe says that, balance sheet aside, a key measure of SPY’s medical utility is reflected in the number of systems that were shipped during the quarter. Novadaq shipped 200 systems in Q1, including 85 FIREFLY systems shipped to robotic surgery partner Intuitive Surgical. The remaining shipments were SPY Elite systems distributed to reconstructive surgery/tissue regeneration partner LifeCell. He says the company is now tracking well above it own guidance of about 100 systems per quarter.

Shares of Novadaq on the TSX closed today down 1% to $13.55.