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Is NuVasive, Inc. (NASDAQ:NUVA) Potentially Undervalued?

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NuVasive, Inc. (NASDAQ:NUVA), might not be a large cap stock, but it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$71.72 and falling to the lows of US$61.52. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether NuVasive's current trading price of US$66.61 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at NuVasive’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for NuVasive

Is NuVasive still cheap?

Great news for investors – NuVasive is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $84.22, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that NuVasive’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will NuVasive generate?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In NuVasive's case, its revenues over the next few years are expected to grow by 32%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since NUVA is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on NUVA for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy NUVA. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

So while earnings quality is important, it's equally important to consider the risks facing NuVasive at this point in time. You'd be interested to know, that we found 1 warning sign for NuVasive and you'll want to know about this.

If you are no longer interested in NuVasive, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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.