On Monday, BofA Securities revised its stock price target for Nevro Corp (NYSE:NVRO), lowering it to $107 from $110, while maintaining a Neutral rating on the stock. The adjustment follows the company's first-quarter results, which were released on May 8th, showcasing a mix of strengths and challenges.
Nevro Corp reported organic growth of 8% and a significant 73% year-over-year increase in positive free cash flow. The company also noted solid backlog wins, with a total of $838 million, marking a 5% increase from the previous year. Despite these positive indicators, the company's operating leverage did not match the revenue growth, with EBITDA rising only 4% on a 16% increase in gross revenue.
The muted operating leverage was attributed to integration costs from mergers and acquisitions, as well as delays caused by the federal continuing resolution. Still, these issues were resolved by the end of the first quarter, according to the company. Nevro Corp is optimistic about the upcoming periods, expecting margins to recover as utilization rates increase and synergies from recent acquisitions are realized.
In light of the recent developments and resolutions, Nevro Corp has raised its full-year 2024 outlook. The company now anticipates gross revenue to be between $937 and $942 million, a slight increase from the previously projected range of $930 to $935 million. Adjusted earnings per share (EPS) are also expected to improve, with the new forecast set at $5.05 to $5.11, up from the earlier estimate of $5.00 to $5.06.
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