NOVT

Public Offering Announcement: Novanta Inc. has priced its public offering of 11 million tangible equity units at $50.00 each, with the offering expected to close on November 12, 2025, pending customary conditions.

Use of Proceeds: The company anticipates net proceeds of approximately $533 million, which will be used to strengthen its balance sheet, fund working capital, repay debt, and support potential acquisitions and investments.

Equity Unit Details: Each tangible equity unit consists of a prepaid stock purchase contract and a senior amortizing note due in 2028, with specific terms regarding interest payments and common share delivery.

Forward-Looking Statements: The announcement includes cautionary statements regarding forward-looking statements, highlighting the uncertainties and risks associated with Novanta's future plans and performance.

Earnings Performance: OSI Systems (OSIS) reported quarterly earnings of $1.42 per share, exceeding the Zacks Consensus Estimate of $1.37, and showing a year-over-year increase from $1.25 per share. The company has consistently surpassed earnings estimates over the last four quarters.

Revenue Growth: The company generated revenues of $384.62 million for the quarter, surpassing the Zacks Consensus Estimate by 2.11% and increasing from $344.01 million a year ago, also achieving four consecutive quarters of exceeding revenue expectations.

Stock Outlook: OSI shares have risen approximately 48.9% year-to-date, significantly outperforming the S&P 500's 17.2% gain. The stock currently holds a Zacks Rank #2 (Buy), indicating expectations for continued outperformance in the near future.

Industry Context: The Electronics - Miscellaneous Components industry, to which OSI belongs, is ranked in the top 17% of Zacks industries, suggesting a favorable environment for stock performance, while Novanta (NOVT), another company in the same sector, is set to report its earnings soon.

Conestoga Capital Advisors' Stake Reduction: Conestoga Capital Advisors sold 168,907 shares of Novanta for approximately $20.1 million in the third quarter, reducing its stake to about 1.4 million shares, which now represents 2.3% of its U.S. equity assets under management.

Novanta's Performance: Novanta's stock has underperformed, down 26% over the past year, contrasting with the S&P 500's nearly 17% gain, which may have influenced Conestoga's decision to scale back its investment.

Operational Challenges: Novanta reported flat organic growth and a significant decline in GAAP profit in its second-quarter results, although adjusted earnings remained steady, indicating potential challenges in reigniting growth.

Market Context: Conestoga's move reflects broader market trends, as technology stocks like Novanta have lagged behind cyclical and semiconductor stocks, suggesting a short-term rotation rather than a fundamental shift in confidence in Novanta's long-term prospects.