Gold is 2025’s best performer. UBS sees more upside
On Wednesday, JPMorgan issued a downgrade for Nevro Corp (NYSE:NVRO) stock, shifting its rating from Neutral to Underweight. The downgrade comes as the firm perceives ongoing challenges for the medical device company, including competition and a recent cut in its 2024 guidance.
Nevro, known for its pain management technology, has been attempting to expand its growth and diversify through new initiatives, such as its Peripheral Diabetic Neuropathy (PDN) treatments and the acquisition of Vyrsa, which focuses on Sacroiliac (SI) Joint issues. Despite these efforts, JPMorgan notes that the company's growth is still trailing behind expectations.
The analyst from JPMorgan highlighted that Nevro faces significant competition from larger companies in the Spinal Cord Stimulation (SCS) market, which has impacted its performance. This competitive landscape is cited as a factor in the company's lowered guidance for the year 2024.
Furthermore, the uncertainty surrounding Nevro's future growth trajectory and its ability to generate cash flow has contributed to the analyst's decision to withdraw the price target for the stock. The lack of clarity regarding how Nevro will navigate its structural issues and improve its growth prospects has led to concerns about its valuation.
This rating change reflects JPMorgan's cautious stance on Nevro's stock, advising investors of the challenges that may lie ahead for the company in achieving its growth and financial targets.
In other recent news, Baird cut its price target due to concerns over the company's short-term growth prospects and market share recovery.
Similarly, BofA Securities, Canaccord Genuity, Piper Sandler, and Jefferies have also revised their price targets. Despite these adjustments, Nevro Corp reported an 8% organic growth and a substantial 73% year-over-year increase in positive free cash flow. The company's operating leverage, however, did not match this revenue growth due to integration costs from mergers and acquisitions.
Nevro Corp has raised its full-year 2024 outlook, expecting gross revenue to be between $937 and $942 million. The company's adjusted earnings per share (EPS) are also expected to improve, with the new forecast set at $5.05 to $5.11.
Nevro Corp's first quarter revenue reached $101.9 million, exceeding both Canaccord Genuity's projection of $97.2 million and the Street's $97.9 million forecast. These recent developments highlight Nevro Corp's financial dynamics and the differing perspectives of financial analysts.
InvestingPro Insights
Following JPMorgan's downgrade of Nevro Corp, an analysis of real-time data from InvestingPro provides additional context to the challenges faced by the company. Nevro's market capitalization stands at a modest $319.17 million, reflecting investor sentiment and market valuation of the company's prospects. The company's price-to-earnings (P/E) ratio is currently negative at -3.81, indicating that it is not generating profits relative to its share price. This aligns with the concerns raised about Nevro's profitability and competitive position in the market.
InvestingPro Tips reveal that Nevro is quickly burning through its cash reserves, which could be a point of concern for investors looking at long-term sustainability. Despite holding more cash than debt, the company's ability to manage its cash flow effectively remains in question. Furthermore, analysts have revised earnings downwards for the upcoming period, suggesting that the financial community remains skeptical about Nevro's ability to meet its growth and profitability targets. For those seeking more detailed analysis, InvestingPro offers additional tips on Nevro's financial health and market prospects.
It is also noteworthy that the company's stock has suffered significantly, with a six-month price total return of -49.45% and a year-to-date return of -59.62%, underscoring the market's reaction to its performance and outlook. These metrics, alongside the InvestingPro Tips, provide investors with a clearer picture of the risks and considerations when evaluating Nevro's stock in their portfolios.
For a more comprehensive set of insights, there are a total of 9 InvestingPro Tips available for Nevro Corp, which can be accessed for further informed investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.