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Here's Why You Should Retain Nevro (NVRO) Stock for Now
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Nevro Corp. (NVRO - Free Report) is well-poised for growth in the coming quarters, courtesy of its research and development (R&D) edge. The optimism, led by a solid first-quarter 2024 performance and continued strength in its flagship Senza platform, is expected to contribute further. However, concerns regarding stiff competition and dependence on third-party payers persist.
This Zacks Rank #3 (Hold) company’s shares have lost 73.5% year to date against the industry’s 7.2% growth. The S&P 500 has increased 16.4% in the said time frame.
The renowned global medical device company has a market capitalization of $208.41 million. The company projects 32.1% growth over the next five years. Nevro’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 37.18%.
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Let’s delve deeper.
R&D Edge: We remain optimistic as Nevro is working to strengthen Senza and discover more indications to improve patient outcomes and increase patient access to HF10 therapy. The company unveiled several product upgrades since the original Senza system was introduced, including active anchors with better performance. NVRO is still improving Senza to increase its functionality.
Per management, there has been a continued increase in the adoption of Nevro’s newest generation SCS system, HFX iQ, since its full market launch. HFX iQ represented more than 50% of the company’s permanent implant procedures in the second quarter of 2024 and the adoption is likely to grow throughout 2024.
During the first quarter, Nevro entered the fast-growing SI joint fusion market through the acquisition of Vyrsa and is focused on ramping up that business. This addition of the newly acquired SI Joint Fusion business is likely to bring additional revenues in the second half of 2024.
In February 2024, Nevro announced that the FDA cleared its SI joint fusion device, which will be marketed as Nevro1, without the need to include the screw (NevroFix).
Strength in Senza: We are upbeat about Nevro's sustained strength in its main Senza platform. The company believes that the 10 kHz therapy can be a desirable course of treatment for patients based on the analysis from the company's SENZA-Randomized Controlled Trial (RCT) and European studies, as well as the SENZA-PDN (Painful Diabetic Neuropathy) and SENZA-NSRBP (non-surgical refractory back pain) RCTs.
The company announced 24 months of data from Nevro’s SENZA-PDN RCT during the first quarter. This demonstrated an improvement in sensory function that can lower the risk of diabetes-related ulcerations and traumatic amputations for patients suffering from severe side effects of diabetes.
Strong Q2 Results: Nevro exited the second quarter of 2024 with better-than-expected earnings. The strong uptake of its new-generation SCS platform, HFX iQ, was also encouraging. The company’s restructuring initiative looks promising as it is likely to support its long-term growth and profitability. Nevro plans to perform additional restructuring activities later this year.
Downsides
Regulatory Requirements: Nevro’s products are subject to extensive regulations in the United States and other countries. The regulations regarding the company’s products are complex and have become more stringent over time. Regulatory changes could result in restrictions on Nevro’s ability to carry on or expand its operations, leading to higher-than-anticipated costs or lower-than-anticipated sales.
Stiff Competition: Nevro operates in the highly competitive and technologically dynamic medical equipment sector. One major reason behind the company's success is its ability to obtain a competitive advantage in the neuromodulation market by garnering broad customer acceptance of its Senza and HF10 medicines for the treatment of recognized chronic pain disorders.
Estimate Trend
Nevro has been witnessing a stable estimate revision trend for 2024. In the past seven days, the Zacks Consensus Estimate for its loss per share has remained stable at $2.71.
The Zacks Consensus Estimate for the company’s second-quarter 2024 revenues is pegged at $93.1 million, indicating a 10.4% decline from the year-ago quarter’s reported number.
DaVita has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%.
DaVita’s shares have risen 43.4% year to date compared with the industry’s 14.3% growth.
Aspen Technology has an estimated long-term growth rate of 13.1%. AZPN’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average surprise being 4.24%.
Shares of Aspen Technology have lost 4.2% year to date against the industry’s 13.5% growth.
Universal Health Services has an estimated long-term growth rate of 19%. UHS' earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.58%.
The company’s shares have risen 48.6% year to date compared with the industry’s 39.7% growth.
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Here's Why You Should Retain Nevro (NVRO) Stock for Now
Nevro Corp. (NVRO - Free Report) is well-poised for growth in the coming quarters, courtesy of its research and development (R&D) edge. The optimism, led by a solid first-quarter 2024 performance and continued strength in its flagship Senza platform, is expected to contribute further. However, concerns regarding stiff competition and dependence on third-party payers persist.
This Zacks Rank #3 (Hold) company’s shares have lost 73.5% year to date against the industry’s 7.2% growth. The S&P 500 has increased 16.4% in the said time frame.
The renowned global medical device company has a market capitalization of $208.41 million. The company projects 32.1% growth over the next five years. Nevro’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 37.18%.
Image Source: Zacks Investment Research
Let’s delve deeper.
R&D Edge: We remain optimistic as Nevro is working to strengthen Senza and discover more indications to improve patient outcomes and increase patient access to HF10 therapy. The company unveiled several product upgrades since the original Senza system was introduced, including active anchors with better performance. NVRO is still improving Senza to increase its functionality.
Per management, there has been a continued increase in the adoption of Nevro’s newest generation SCS system, HFX iQ, since its full market launch. HFX iQ represented more than 50% of the company’s permanent implant procedures in the second quarter of 2024 and the adoption is likely to grow throughout 2024.
During the first quarter, Nevro entered the fast-growing SI joint fusion market through the acquisition of Vyrsa and is focused on ramping up that business. This addition of the newly acquired SI Joint Fusion business is likely to bring additional revenues in the second half of 2024.
In February 2024, Nevro announced that the FDA cleared its SI joint fusion device, which will be marketed as Nevro1, without the need to include the screw (NevroFix).
Strength in Senza: We are upbeat about Nevro's sustained strength in its main Senza platform. The company believes that the 10 kHz therapy can be a desirable course of treatment for patients based on the analysis from the company's SENZA-Randomized Controlled Trial (RCT) and European studies, as well as the SENZA-PDN (Painful Diabetic Neuropathy) and SENZA-NSRBP (non-surgical refractory back pain) RCTs.
The company announced 24 months of data from Nevro’s SENZA-PDN RCT during the first quarter. This demonstrated an improvement in sensory function that can lower the risk of diabetes-related ulcerations and traumatic amputations for patients suffering from severe side effects of diabetes.
Strong Q2 Results: Nevro exited the second quarter of 2024 with better-than-expected earnings. The strong uptake of its new-generation SCS platform, HFX iQ, was also encouraging. The company’s restructuring initiative looks promising as it is likely to support its long-term growth and profitability. Nevro plans to perform additional restructuring activities later this year.
Downsides
Regulatory Requirements: Nevro’s products are subject to extensive regulations in the United States and other countries. The regulations regarding the company’s products are complex and have become more stringent over time. Regulatory changes could result in restrictions on Nevro’s ability to carry on or expand its operations, leading to higher-than-anticipated costs or lower-than-anticipated sales.
Stiff Competition: Nevro operates in the highly competitive and technologically dynamic medical equipment sector. One major reason behind the company's success is its ability to obtain a competitive advantage in the neuromodulation market by garnering broad customer acceptance of its Senza and HF10 medicines for the treatment of recognized chronic pain disorders.
Estimate Trend
Nevro has been witnessing a stable estimate revision trend for 2024. In the past seven days, the Zacks Consensus Estimate for its loss per share has remained stable at $2.71.
The Zacks Consensus Estimate for the company’s second-quarter 2024 revenues is pegged at $93.1 million, indicating a 10.4% decline from the year-ago quarter’s reported number.
Nevro Corp. Price
Nevro Corp. price | Nevro Corp. Quote
Zacks Rank & Stocks to Consider
Nevro currently sports a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are DaVita (DVA - Free Report) , Aspen Technology (AZPN - Free Report) and Universal Health Services (UHS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 24.2%.
DaVita’s shares have risen 43.4% year to date compared with the industry’s 14.3% growth.
Aspen Technology has an estimated long-term growth rate of 13.1%. AZPN’s earnings surpassed estimates in two of the trailing four quarters and missed the same twice, the average surprise being 4.24%.
Shares of Aspen Technology have lost 4.2% year to date against the industry’s 13.5% growth.
Universal Health Services has an estimated long-term growth rate of 19%. UHS' earnings surpassed estimates in each of the trailing four quarters, the average surprise being 14.58%.
The company’s shares have risen 48.6% year to date compared with the industry’s 39.7% growth.