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Novanta (NOVT) Moves 9.6% Higher: Will This Strength Last?

Novanta (NOVT) shares soared 9.6% in the last trading session to close at $150.08. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 11.3% gain over the past four weeks.

Novanta extended its rally, driven by the fact that it is joining the S&P MidCap 400 index by replacing Six Flags Entertainment. Further, Novanta’s solid momentum across the high-growth markets is a positive. Growing bookings of the company owing to increasing customer demand across the industrial and medical application fields, are contributing well.

This photonic and motion control components maker is expected to post quarterly earnings of $0.72 per share in its upcoming report, which represents a year-over-year change of +16.1%. Revenues are expected to be $208.7 million, up 24.6% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Novanta, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. 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 belongs to the Zacks Electronics - Miscellaneous Components industry. Another stock from the same industry, Fabrinet (FN), closed the last trading session 1.9% lower at $88.59. Over the past month, FN has returned 15%.

For Fabrinet , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.55. This represents a change of +18.3% from what the company reported a year ago. Fabrinet currently has a Zacks Rank of #3 (Hold).

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