Here's Why You Should Hold on to Nevro (NVRO) Stock Now
Nevro Corp. NVRO is well poised for growth on the back of its flagship platform — Senza, and research and development (R&D) capabilities. However, intense competition continues to mar prospects.
The stock has gained 29.5%, compared with the industry’s growth of 21% in a year’s time. Further, the S&P 500 Index rallied 9.8% in the same time frame.
Nevro — with a market capitalization of $5.22 billion — is a medical device company that engages in developing and commercializing a neuromodulation platform for the treatment of chronic pain, primarily in the leg. Its beat estimates in each of the trailing four quarters, the average surprise being 27.9%.
Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).
What’s Deterring the Stock?
Nevro faces stiff competition in the Spinal Cord Stimulation (SCS) market. Per management, the primary factors intensifying the competition are brand recognition, clinical research leadership, and pricing and reimbursement. Consequently, this remains a concern.
Key Catalysts
Nevro’s flagship platform, Senza, has been developed and commercialized for the treatment of chronic pain. The system delivers paresthesia-free HF10 therapy, which is superior compared with the traditional low-frequency SCS for the treatment of chronic back and leg pain. Further, Nevro recently launched its next product platform, Senza Omnia, in the United States that is expected to provide it a competitive edge in the near future.
The Senza Omnia has been gaining traction through the first quarter of 2020. Omnia, which is the only SCS platform that can offer high frequency, plus lower frequencies and paired waveforms, received an earlier-than-expected approval in Australia during the first quarter.
In May 2020, the company announced the receipt of CE mark approval for the Senza Omnia SCS system. This next-generation SCS system has been created and developed in close consultation with customers to offer a comprehensive solution for chronic pain. This approval is likely to aid Nevro in strengthening its international presence further. In second-quarter 2020, the company launched Omnia in Europe and Australia and is ramping efforts in those markets.
Nevro aims to continue improving patient outcomes and expanding patient access to HF10 therapy through enhancements to Senza and development of newer indications.
Through the second quarter, the company continued to invest in R&D to strengthen product capabilities and expand total addressable markets with new clinical data and patient indications. On the clinical and regulatory side of things, Nevro remains focused on conducting a plethora of remote clinical studies for its 2 large-scale randomized controlled trials.
Apart from this, in September 2020, Nevro announced that it will set up global manufacturing operations in Costa Rica that will enable it to make investment in and lend support to the company’s future growth prospects. In fact, the company has expanded its direct sales operations to Austria, Australia, Belgium, Germany, Luxembourg, Netherlands, Norway, Sweden and Switzerland. This announcement is likely to boost its prospects when it comes to international markets.
Which Way are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $362.5 million, indicating a decline of 7.1% from the prior-year quarter. The same for adjusted loss per share stands at $2.95.
Stocks to Consider
Some better-ranked stocks from the broader medical space include DaVita Inc. DVA, Boston Scientific Corporation BSX and Thermo Fisher Scientific Inc. TMO. While Boston Scientific carries a Zacks Rank #2 (Buy), both DaVita and Thermo Fisher sport a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has a projected long-term earnings growth rate of 11.9%.
Boston Scientific has an estimated long-term earnings growth rate of 10%.
Thermo Fisher has a projected long-term earnings growth rate of 15.5%.
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