NuVasive Advances on Global Footprint Despite Pricing Woes
On Dec 3, we issued an updated research report on NuVasive, Inc. NUVA. The company continues to witness strength in the global business. However, persistent decline in product prices due to intense competition in the spine market is a concern. NuVasive currently carries a Zacks Rank #3 (Hold).
In the past three months, shares of NuVasive have outperformed its industry. The stock has rallied 23.7% compared with the industry's 6.9% rise.
NuVasive registered a solid top-line performance in the third quarter on strong contributions from the U.S. spinal hardware and clinical services business. Within the U.S. Spinal Hardware business, a solid expansion in case volume and tangible growth in the XLIF and ALIF franchises, driven by the continued adoption of NuVasive's X360 system, are major positives.
Within the Surgical Support arm, the company gained a steady momentum from the NuVasive clinical services business, primarily attributable to another quarter of strong billings and collections plus higher growth in procedure volume. Consistent traction from several new products like Modulus XLIF also contributed to the share price appreciation. In terms of product launches, the company is on track to unveil more than a dozen products this year, spanning from solutions in core implant and fixation product lines to enabling technologies for supporting the further uptake of minimally invasive surgery.
NuVasive, Inc. Price
Per NuVasive, the International region holds tremendous growth opportunity for the company. In the reported quarter, the company’s international revenues of $59 million reflect 13.4% year-over-year growth at CER. The EMEA region witnessed a solid uptick, boosted by substantial contributions from the United Kingdom and Spain. In Asia Pacific, Japan delivered a strong top line despite several near-term challenges.
Meanwhile, unfavorable pricing persists as a major headwind as NuVasive witnesses declining prices of products due to stiffening competition in the spine market; adverse pricing pressure experienced by hospital customers from managed care organizations, insurance providers as well as other third-party payers; and higher market power of hospital customers as the medical device industry consolidates. Further, escalating costs and expenses are other major concerns.
A few better-ranked stocks from the broader medical space are Haemonetics Corporation HAE, National Vision Holdings, Inc EYE and ResMed RMD. While ResMed sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics has a projected long-term earnings growth rate of 13.5%.
National Vision’s long-term earnings growth rate is estimated at 17.8%.
ResMed has a long-term earnings growth rate of 12.9%.
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