Here's Why Novanta (NOVT) Traded Down in Q3

Conestoga Capital Advisors, an asset management company, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets continued their momentum that began in early April, reaching new all-time highs in the third quarter. In the quarter, the Conestoga Small Cap Composite returned -1.4% net-of-fees, underperforming the Russell 2000 Growth Index’s impressive 12.2% gain. Most of the Index's gains come from low-quality stock leadership, where unprofitable, high-beta names have considerably outperformed. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.

In its third-quarter 2025 investor letter, Conestoga Capital Advisors 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 -6.45%, and its shares lost 39.50% of their value over the last 52 weeks. On October 17, 2025, Novanta Inc. (NASDAQ:NOVT) stock closed at $105.56 per share, with a market capitalization of $3.797 billion.

Conestoga Capital Advisors stated the following regarding Novanta Inc. (NASDAQ:NOVT) in its third quarter 2025 investor letter:

"Novanta Inc. (NASDAQ:NOVT) supplies photonics, vision, and precision-motion subsystems to med-tech and advanced industrial OEMs. The stock underperformed due to underwhelming revenue growth and a subdued full-year cadence; even subsequent results that beat on EPS were met with selling, reflecting skepticism on near-term acceleration. Cautious positioning toward med-tech capital equipment and China-exposed components also weighed on sentiment during the quarter."

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 Brown Advisory Small-Cap Growth Strategy's views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 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.