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NuVasive Gains From International Business Amid Pricing Woes

Zacks

On Mar 5, we issued an updated research report on NuVasive, Inc. NUVA. While a strong Spine market spells huge scope for this Zacks Rank #3 (Hold) stock, pricing and payer pressure come as major headwinds.

Notably, NuVasive exited the fourth quarter of 2017 on a dismal note with its top line missing the Zacks Consensus Estimate. The U.S. business also delivered a dull performance with softness in both U.S. Spinal Hardware and U.S. Surgical Support businesses.

On a positive note, the company’s solid international business registered more than 20% growth for the fifth consecutive quarter, buoying optimism on the stock among investors. Per management, the International region holds a tremendous growth opportunity for NuVasive.

Also, NuVasive’s U.S. surgical support business has performed robustly in the recent times. This segment’s flourish is attributed to Biotronic, acquired in July 2016. With its integration still on track pertaining to a large-scale buyout, the company anticipates benefits of building an up-scale service business.


Management believes that the addition of Biotronic to NuVasive’s profile has enhanced the company’s service offerings and is delivering a greater consolidation across its procedurally integrated portfolio.

Currency volatility, reimbursement issues and a competitive landscape have been continuously posing challenges to the stock. Also, pricing pressure persists as a big concern for NuVasive with the company facing declining product prices due to stiff competition in the spine market.

In the past three months, NuVasive has underperformed the industry it belongs to. The stock has declined 12.3% against the industry’s 4.7% gain.

Key Picks

Some better-ranked stocks in the broader medical sector are Bio-Rad Laboratories BIO, PetMed Express PETS and PerkinElmer PKI.

Bio-Rad Laboratories sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company has a long-term expected earnings growth rate of 20%.

PetMed has a long-term expected earnings growth rate of 10% and a Zacks Rank of 1.

PerkinElmer has a long-term expected earnings growth rate of 12.3% and a Zacks Rank #2 (Buy).

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