Novanta (NOVT) shares plummeted 12.45% in pre-market trading on Tuesday, as the life-sciences equipment manufacturer warned of potential sales impacts from tariffs and announced plans for significant cost-cutting measures. Despite reporting a rise in first-quarter earnings, the company's cautious outlook and response to trade tensions have sparked investor concerns.

In its Q1 2025 financial results, Novanta reported a consolidated net income of $21.2 million, up from $14.7 million in the same period last year. Revenue saw a modest 1.1% increase to $233.4 million. However, the company's forward-looking statements have raised red flags for investors. CEO Matthijs Glastra cited "limited visibility of rapid trade policy changes" and "heightened uncertainty caused by global trade disruptions" as factors making long-term revenue predictions challenging beyond the second quarter.

In response to these challenges, Novanta announced plans for "cost containment actions" aimed at reducing annual costs by $20 million. This move, coupled with the company's cautious Q2 guidance of adjusted earnings between $0.68 and $0.78 per share on revenue of $230-240 million, suggests that Novanta is bracing for potential headwinds. The market's sharp negative reaction indicates that investors are wary of the company's ability to navigate the complex trade environment and maintain growth in the face of these challenges.