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Nevro Corp.'s (NYSE:NVRO) Path To Profitability

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Simply Wall St
·3 min read
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Nevro Corp. (NYSE:NVRO) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Nevro Corp., a medical device company, provides products for the patients suffering from chronic pain in the United States and internationally. The US$6.1b market-cap company’s loss lessened since it announced a US$104m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$90m, as it approaches breakeven. The most pressing concern for investors is Nevro's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Nevro

According to the 14 industry analysts covering Nevro, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$22m in 2023. The company is therefore projected to breakeven around 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 55% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Nevro's upcoming projects, however, bear in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Nevro is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Nevro's case is 81%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Nevro to cover in one brief article, but the key fundamentals for the company can all be found in one place – Nevro's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

  1. Valuation: What is Nevro worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Nevro is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Nevro’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.