Nevro Corp. NVRO is well-poised for growth, backed by strong international presence, solid prospects in the Spinal Cord Stimulation (SCS) market and focus on innovation. However, intense competition remains a concern.
Shares of Nevro have gained 7.7%, compared with the industry’s growth of 1.7% on a year-to-date basis. However, the S&P 500 Index declined 8.2%.
The company, with a market capitalization of $4.31 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 26.1% over the next five years. Moreover, it has a trailing four-quarter positive earnings surprise of 20.7%, on average.
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 Driving Nevro
Nevro continues to benefit from sturdy international foothold, thereby driving overall performance. Despite a decline in international revenues in the first quarter, the company expects to see continuous sequential improvement of the same in the second quarter, particularly in the month of May, and again in June as procedures are restored in the United States, parts of Europe, and Australia.
Further, robust prospects in the SCS market have been favoring the company for quite some time. Aging demographics, high cost related to therapy, strict regulatory approvals and an excessive reliance on the traditional SCS therapy are the primary factors driving the global SCS market.
During first-quarter 2020, the company announced positive developments related to its intellectual property litigations. The company witnessed two developments that highlighted the strength of its intellectual property portfolio and commitment to safeguard its investment in a bid to support high frequency SCS therapy.
Nevro’s flagship platform — Senza — continues to be a key growth driver. In recent times, Nevro launched its next product platform, Senza Omnia, in the United States which is expected to provide the company a competitive edge in the near future.
The Senza Omnia gained traction through the first quarter of 2020. Omnia, which is the only SCS platform that can offer high frequency, plus lower frequencies and paired waveforms, received an earlier-than-expected approval in Australia during the first quarter. The company is currently awaiting a CE Mark approval for the platform in Europe in the near future.
Which Way Are Estimates Headed?
For 2020, the Zacks Consensus Estimate for revenues is pegged at $313.8 million, indicating a decline of 19.6% from the year-ago reported figure. The same for adjusted loss per share stands at $3.86.
Stocks to Consider
Some better-ranked stocks from the broader medical space include Aphria (NYSE:APHA) Inc. APHA and HMS Holdings Corp. HMSY, both carrying a Zacks Rank #2 (Buy), and West Pharmaceutical Services (NYSE:WST), Inc. WST sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Aphria has an estimated long-term earnings growth rate of 24.6%.
HMS Holdings has an estimated long-term earnings growth rate of 11%.
West Pharmaceutical has a projected long-term earnings growth rate of 9.2%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple (NASDAQ:AAPL) sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
HMS Holdings Corp (HMSY): Free Stock Analysis Report
West Pharmaceutical Services, Inc. (WST): Free Stock Analysis Report
Nevro Corp. (NVRO): Free Stock Analysis Report
Aphria Inc. (APHA): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research