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Novanta (NOVT) Soars 7.1%: Is Further Upside Left in the Stock?

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Novanta (NOVT - Free Report) shares ended the last trading session 7.1% higher at $137.13. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 7.3% loss over the past four weeks.

Novanta extended its rally, driven by its solid momentum across the high-growth markets. Further, growing bookings of the company owing to increasing customer demand across the industrial and medical application fields, are contributing well. Further, growth prospects associated with the acquisitions of ATI and Schneider Electric Motion are instilling investors’ optimism in the stock.

This photonic and motion control components maker is expected to post quarterly earnings of $0.63 per share in its upcoming report, which represents a year-over-year change of +8.6%. Revenues are expected to be $195.82 million, up 20.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Novanta, the consensus EPS estimate for the quarter has been revised 11.3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on NOVT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Novanta is a member of the Zacks Electronics - Miscellaneous Components industry. One other stock in the same industry, OSI Systems (OSIS - Free Report) , finished the last trading session 0.7% lower at $82.92. OSIS has returned 1.9% over the past month.

For OSI, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.38. This represents no change from what the company reported a year ago. OSI currently has a Zacks Rank of #3 (Hold).

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