On Tuesday, Piper Sandler adjusted its stance on Nevro Corp (NYSE:NYSE:NVRO) shares, a medical device company, by reducing the price target to $6 from the previous $7 while maintaining an Underweight rating on the stock.
The firm's analyst highlighted Nevro's third-quarter results, which surpassed consensus expectations with revenues of $96.9 million, exceeding both the firm's and the Street's estimates of $92 million and $93 million, respectively.
The adjusted EBITDA for the quarter was also notably better, coming in at a loss of $1.8 million compared to the consensus estimate of a $9.6 million loss.
Nevro's financial performance for the quarter showed resilience, with the company maintaining its full-year 2024 revenue guidance at $400 million to $405 million. Moreover, Nevro improved its adjusted EBITDA outlook to a loss of $16 million to $18 million, an enhancement from the prior forecast of a $18 million to $20 million loss. Despite these positive indicators, Piper Sandler expressed concerns regarding the company's growth prospects.
The analyst's concerns are rooted in the performance of Nevro's U.S. spinal cord stimulation (SCS) franchise, which is estimated to have declined by 7.5%, with the U.S. core SCS performing even below that level. Furthermore, Nevro reported ongoing weakness in U.S. trial procedures, which saw a year-over-year decrease of 15.2% in the third quarter.
In summary, while Piper Sandler acknowledged the improvement in adjusted EBITDA for Nevro, the firm remains cautious about the company's ability to drive growth in the future. This caution is reflected in the revised price target of $6, down from $7, while the analyst reiterated the Underweight rating on Nevro's shares.
In other recent news, Nevro Corp has seen significant developments in its financial performance and strategic direction. The company's Q3 earnings report indicated a decrease in worldwide revenue by 6.7% to $96.9 million, with adjusted EBITDA loss notably better than anticipated, reporting a loss of $1.8 million due to effective cost-cutting measures. Despite these figures, Nevro maintained its revenue guidance for the full year 2024.
Baird has adjusted Nevro's stock target, upgrading it to $6.00 from $5.00, while maintaining a neutral rating. This adjustment reflects Nevro's ongoing business transformation and potential margin improvements anticipated in fiscal year 2025.
In contrast, Canaccord Genuity cut its price target for Nevro to $7.00, down from $8.00, while also maintaining a Hold rating, following Nevro's Q3 earnings report and assessment of ongoing market challenges.
Nevro has responded to strong market competition by focusing on artificial intelligence innovations, receiving FDA approval for its HFX iQ with HFX AdaptivAI technology. The company also recognized the need for increased direct-to-consumer spending following a 15.2% drop in US trial procedures during Q3. These are among the recent developments for Nevro Corp.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Piper Sandler's analysis of Nevro Corp (NYSE:NVRO). The company's market capitalization stands at $198.35 million, reflecting its current position in the medical device sector. Nevro's revenue for the last twelve months as of Q2 2024 was $426.1 million, with a modest growth of 1.59% over the same period.
InvestingPro Tips highlight some challenges facing Nevro. The company is "quickly burning through cash" and "not profitable over the last twelve months," which aligns with Piper Sandler's concerns about growth prospects. Additionally, the stock "has taken a big hit over the last six months," with InvestingPro data showing a 45.66% price decline in that period.
On a more positive note, Nevro "operates with a moderate level of debt" and its "liquid assets exceed short-term obligations," suggesting some financial stability despite current headwinds. The company is also "trading at a low revenue valuation multiple," which could be of interest to value-oriented investors.
For readers seeking a deeper understanding of Nevro's financial position, InvestingPro offers 8 additional tips, providing a more comprehensive analysis of the company's prospects in the challenging medical device market.
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