A month has gone by since the last earnings report for NuVasive (NUVA). Shares have lost about 1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is NuVasive due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
NuVasive Gains Ground On Solid Global Business in Q4
NuVasive reported fourth-quarter 2018 adjusted earnings per share (EPS) of 69 cents, reflecting a 23.2% rise from the year-ago quarter. The figure also surpassed the Zacks Consensus Estimate by 9.5%. On a reported basis, fourth-quarter 2018 EPS came in at 23 cents, a plunge of 48.9% from the year-ago period.
For the full year of 2018, adjusted EPS came in at $2.23, an increase of 17.9% from the year-ago period.
Revenues in the fourth quarter came in at $288.3 million, up 6.3% on a reported basis (up 6.9% at constant exchange rate or CER) year over year. The top line also beat the Zacks Consensus Estimate, by a margin of 0.01%. For the full year, total revenues came in at $1.10 billion, up 7.3% on a reported basis, and at 7.1% at CER.
Geographical & Segmental Details
In the quarter under review, revenues at the U.S. Spinal Hardware business increased 4.5% year over year to $156.6 million. This revenue upside was contributed by product launches like expandable, titanium and Porous PEEK implants, TLIF and XLIF Modulus, COHERE and COALESCE, TLX 20 Degree expandable cage, and RELINE Small Stature.
Revenues in the U.S. Surgical Support business were $75.3 million in the fourth quarter, up 8.9% year over year. This upside was driven by 12.9% year-over-year growth of organic revenues in the NCS, excluding the $5-million contribution from the SafePassage acquisition.
Within the Biologics segment, there was a sequential revenue increment of 4% over the third quarter, even though the business line faced a 6.5% year-over-year decline. The Biologics segment has made strong strides on account of the increased sales of its products in majority of spine and orthopedic cases.
In the fourth quarter, the company registered international revenues amounting to $56.4 million, reflecting 11% year-over-year growth at CER. The EMEA region witnessed growth of 11.1% year over year at CER. This upswing stemmed from recurring investments in Germany and ongoing synergies with a Swiss acquisition. Solid revenue growth in the Southern (NYSE:SO) Europe region came primarily from Italy and Spain.
The revenues from the Asia-Pacific region grew 9.5% at CER, fueled primarily by new surgeon conversion in Japan, Australia and New Zealand. Revenues from Latin America climbed 18% at CER, banking on an increase in procedural volumes and continued recovery in Puerto Rico.
Margin Details
In the reported quarter, gross profit improved 3.2% year over year to $202.2 million. However, gross profit margin contracted 210 basis points (bps) to 70.1%. Adjusted operating profit declined 11.9% from the year-ago period to $42.9 million owing to year-over-year rise in operating expenses. Accordingly, adjusted operating margin shrunk 306 bps to 14.9% in the quarter under review.
Operational Update
The company exited 2018 with cash and cash equivalents of $117.8 million, up from $72.8 million at the end of 2017. Net cash provided by operating activities at the end of 2018 was $219.2 million as compared to $176.9 million.
Guidance for 2019
NuVasive has provided its guidance for 2019. The revenues have been estimated to be in the range of $1.14-$1.16 billion. The Zacks Consensus Estimate for 2019 revenues is $1.17 billion, which lies above the higher-end of the guided range provided by the company. The company expects the adjusted EPS for 2019 to be in the $2.20-$2.30 range. The Zacks Consensus Estimate for this metric is $2.45, which falls above the higher-end of the guided range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -10.87% due to these changes.
VGM Scores
Currently, NuVasive has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise NuVasive has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
NuVasive, Inc. (NUVA): Free Stock Analysis Report
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