Markets

NuVasive Poised on Balanced Growth, International Expansion - Analyst Blog

On Apr 13, 2015, we initiated our coverage on NuVasive, Inc.NUVA . We are impressed with the continued strong growth visible across all the product lines and the expansive geographic reach of the company.

Based on market share-taking strategy, the company reflected balanced growth in the U.S. and outside. While lumbar and biologics continued to grow well in the U.S., NuVasive demonstrated strong performance in Asia-Pacific, Latin America and EMEA. According to the company, the gradual shift in spine market toward minimally invasive surgery and increase in international access to healthcare has provided NuVasive with huge opportunity for accelerated growth outside the U.S.

We are also encouraged by the huge scope of growth in spine market. According to NuVasive, the spine fusion market, including biologics, is estimated to be approximately $9.0 billion globally in 2015. This market is gradually experiencing greater adoption and increasing demand for the company's line of surgical alternatives with less tissue disruption.

In addition, a strong financial position enables the company to enhance shareholders' value. The company has been experiencing solid margin expansion primarily on the back of continued strong operational gains driven by improved asset efficiencies. The asset enhancement was a result of NuVasive tracking the utilization of assets in the field and managing product transitions more effectively. NuVasive expects this growth process to continue in 2015 as well.

On the flip side, pricing continues to be a major headwind for NuVasive as it experiences declining prices for its products due to increasing competition in the spine market; pricing pressure experienced by hospital customers; and increased market power of hospital customers as the medical device industry consolidates.

For 2015, while the company expects continued progress from in-sourcing efforts that should drive approximately 50 basis points of improvement, this may be dampened by continued mix and pricing pressure. NuVasive projects a negative 2% pricing impact on the gross margin in 2015, which is relatively consistent with the year-ago level. Also, the competitive landscape remains tough.

The stock currently carries a Zacks Rank #2 (Buy).

Key Picks from the Sector

Some other top-ranked stocks in the broader medical sector are SurModics, Inc. SRDX , LeMaitre Vascular, Inc. LMAT and Phibro Animal Health Corporation PAHC . All of these three stocks carry a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SURMODICS (SRDX): Free Stock Analysis Report

NUVASIVE INC (NUVA): Free Stock Analysis Report

LEMAITRE VASCLR (LMAT): Free Stock Analysis Report

PHIBRO ANIMAL (PAHC): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

NUVA SRDX LMAT PAHC

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More