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Here's Why You Should Hold on to NuVasive (NUVA) Stock Now

NuVasive, Inc. NUVA has been gaining on FDA clearances for its products as well as a slew of product launches. Its impressive second-quarter 2020 results buoy optimism. However, coronavirus-led procedural deferrals and a tough competitive landscape are concerning.

Over the past year, the Zacks Rank #3 (Hold) stock has lost 17.6% versus the industry’s 4.4% fall and the S&P 500’s 18.3% rise.

The renowned surgical spine player has a market capitalization of $2.69 billion. The company projects 10.1% growth for the next five years and expects to maintain its strong performance. The company surpassed estimates in all of the trailing four quarters, the average surprise being 20.16%.

Let’s delve deeper.

Impressive Q2 Results: NuVasive’s narrower-than-expected loss per share in second-quarter 2020 buoys optimism. The company’s plans to maintain R&D investment instill investor confidence. The X360 system’s potential also buoys optimism. The FDA’s 510(k) clearances for Modulus ALIF and Cohere transforaminal lumbar interbody fusion (TLIF)-O look encouraging.

Product Launches: We are upbeat about the slew of product launches by NuVasive. The company, in July, launched its Time to Evolve campaign to help provide less-invasive surgical techniques. It also expanded its complex spine portfolio with the global commercial availability of Reline 3D (a posterior fixation system for patients suffering from pediatric spinal deformities) in June.

In May, the company announced the expansion of its Advanced Materials Science implant portfolio with the commercial launch of the Modulus XLIF Dual Sided Plate. It is also on track to commercially launch an interior cervical plate and posterior cervical fixation system to help treat degenerative trauma and deformity pathologies by the end of the year. Additionally, NuVasive will continue momentum in transforming the TLIF market by entering into alpha launches for coherent TLIF O and TLIF A.

U.S. Surgical Support Prospect Strong: NuVasive’s buyout of Safe Passage in 2019 looks encouraging for its Surgical Support business. Per management, the market is gradually experiencing greater adoption and increasing demand for its offering of surgical alternatives with less tissue disruption. NuVasive continues to focus on unique spine offerings. Despite the pandemic-led business debacle, the company witnessed volume improvement throughout the second quarter. Additionally, NuVasive Clinical Services continued to drive business and operational efficiencies during this time.

Downsides:

Coronavirus-Led Procedural Deferrals Hurt Sales: The U.S. Spinal Hardware business revenues declined in the second quarter of 2020. The company noted that it registered a temporary but significant impact on its business due to the pandemic as the major part of the company’s business is considered elective. Further, new patient clinical volumes continue to be suppressed, creating uncertainty in volumes.

Stiff Competition: NuVasive competes with a large number of players, making the medical devices market intensely competitive. The orthopedic industry, in particular, is highly competitive with the presence of bellwethers like Medtronic.

Estimate Trend

NuVasive has been witnessing a positive estimate revision trend for 2020. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 32.4% north to 94 cents.

The Zacks Consensus Estimate for its third-quarter 2020 revenues is pegged at $256.5 million, suggesting an 11.8% fall from the year-ago number.

Key Picks

Some better-ranked stocks from the broader medical space are QIAGEN N.V. QGEN, Thermo Fisher Scientific Inc. TMO and Hologic, Inc. HOLX.

QIAGEN’s long-term earnings growth rate is estimated at 22.3%. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Thermo Fisher’s long-term earnings growth rate is estimated at 15%. It currently carries a Zacks Rank #2 (Buy).

Hologic’s long-term earnings growth rate is estimated at 15.5%. The company presently sports a Zacks Rank #1.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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