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Here's Why You Should Retain Nevro (NVRO) Stock for Now

Zacks Equity Research

Nevro Corp. NVRO is well-poised for growth, backed by strong international presence, solid prospects in the Spinal Cord Stimulation (SCS) market and commitment toward innovation. However, intense competition remains a concern.

Shares of Nevro have soared 173.5%, outperforming the industry’s growth of 14.2% in a year’s time. Further, the S&P 500 Index rallied 17.4%.

The company, with a market capitalization of $3.52 billion, is a medical device company engaged in developing and commercializing a neuromodulation platform for the treatment of chronic pain, primarily in the leg.  It anticipates earnings to improve 7.9% over the next five years. Moreover, it has delivered a positive earnings surprise of 31.8% in the last reported quarter.

Let’s take a closer look at the factors that substantiate the company’s Zacks Rank #3 (Hold).

What’s Deterring the Stock?

Intense competition in the SCS market remains a woe. Per management, the primary competitive factors include company brand recognition, clinical research leadership, pricing and reimbursement.

Factors to Bolster Nevro

Nevro continues to benefit from sturdy international foothold, thereby driving overall performance. Per management, growth in Europe is anticipated to improve worldwide revenues in 2019.

Further, robust prospects in the SCS market have been favoring the company over a considerable period of time. Aging demographics, high cost related to therapy, strict regulatory approvals and an excessive reliance on the traditional SCS therapy are the major factors driving the global SCS market.

Per a Market Data Forecast report, the global SCS market is estimated to reach $2,827.4 million at a CAGR of 8.6% (between 2018 and 2023).

Consistent focus on innovation has been crucial in bolstering the company’s overall performance.

Strong outlook for 2019 instills optimism in the stock. Notably, the company now expects worldwide revenues between $383 million and $386 million (up from the previously guided range of $368-$374 million).

Which Way Are Estimates Headed?

For 2019, the Zacks Consensus Estimate for revenues is pegged at $384.9 million, indicating a decline of 0.6% from the year-ago reported figure. The same for adjusted loss per share stands at $3.75.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Conmed Corporation CNMD, West Pharmaceutical Services, Inc. WST and Edwards Lifesciences Corporation EW, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here . 

Conmed has a long-term earnings growth rate of 17%.

West Pharmaceutical has a long-term earnings growth rate of 14%.

Edwards Lifesciences has a long-term earnings growth rate of 14.8%.

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Nevro Corp. (NVRO) : Free Stock Analysis Report
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