NuVasive, Inc. (NASDAQ:NUVA), which is in the medical equipment business, and is based in United States, saw a significant share price rise of over 20% in the past couple of months on the NASDAQGS. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine NuVasive’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What is NuVasive worth?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 16.92% above my intrinsic value, which means if you buy NuVasive today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $68.17, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? 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 an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from NuVasive?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. With profit expected to more than double over the next couple of years, the future seems bright for NuVasive. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in NUVA’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on NUVA, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on NuVasive. You can find everything you need to know about NuVasive in the latest infographic research report. If you are no longer interested in NuVasive, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
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