Should You Invest in Novanta (NOVT)?

Brown Advisory, an investment management company, released its "Brown Advisory Small-Cap Growth Strategy" second-quarter 2025 investor letter. During the first half of the year, the Brown Advisory Small-Cap Growth Strategy delivered results consistent with its historical performance. A copy of the letter can be downloaded here. In the first quarter of 2025, the portfolio remained robust, outperforming the declines of -9.5% for the Russell 2000 Index and -11.1% for the Russell 2000 Growth Index. However, in the second quarter, unprofitable companies within the Russell 2000 Index outperformed profitable ones, reversing a previous quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Brown Advisory Small-Cap Growth Strategy highlighted stocks such as Novanta Inc. (NASDAQ:NOVT). Novanta Inc. (NASDAQ:NOVT) offers precision medicine and manufacturing, medical solutions, and robotics and automation solutions. The one-month return of Novanta Inc. (NASDAQ:NOVT) was -1.01%, and its shares lost 35.24% of their value over the last 52 weeks. On September 03, 2025, Novanta Inc. (NASDAQ:NOVT) stock closed at $112.59 per share, with a market capitalization of $4.05 billion.

Brown Advisory Small-Cap Growth Strategy stated the following regarding Novanta Inc. (NASDAQ:NOVT) in its second quarter 2025 investor letter:

"Novanta Inc. (NASDAQ:NOVT) is a diversified industrial company serving above average growth end markets, including semiconductors, life sciences and robotics. We have been tracking the business over the last several years and the recent sell-off finally provided an attractive entry point. The majority of their end markets have already exhibited weakness and should be positioned for a rebound over the next couple years. When you combine this view with high incremental margins, a positively skewed risk/reward ratio is attained without assuming the overly lofty multiples of the recent past."

Novanta Inc. (NASDAQ:NOVT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held Novanta Inc. (NASDAQ:NOVT) at the end of the second quarter, which was 31 in the previous quarter. Novanta Inc.'s (NASDAQ:NOVT) revenue reached $241 million in the second quarter of 2025, reflecting a reported growth of 2% and a 2% decline in organic revenue. While we acknowledge the potential of Novanta Inc. (NASDAQ:NOVT) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Novanta Inc. (NASDAQ:NOVT) and shared Artisan Small Cap Fund's views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.