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NuVasive Poised on Solid International Sales, Scope in Spine

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On May 30, 2016, we updated our research report on NuVasive, Inc. , a leading player in the global spine market, focused on developing minimally-disruptive surgical products and procedurally-integrated solutions for the spine. The stock currently carries a Zacks Rank #3 (Hold).

NuVasive delivered a strong first-quarter 2016 with both earnings and revenues ahead of the Zacks Consensus Estimate. Post the fourth quarter’s disruptive sales performance in the international market, the first quarter witnessed a solid show in this geography on the back of exceptional constant currency performance in both the Asia-Pacific and EMEA.

According to management, the International region offers tremendous growth opportunity for NuVasive, given that the company currently holds a mere 4% of the total market share therein. The company currently expects its International business to grow by 38% in 2016 at CER. In line with this expectation, NuVasive’s International business grew a strong 20.7% at CER in the reported quarter.

Moreover, the ample scope of growth in the spine market buoys optimism. According to management, in 2015 alone, NuVasive launched several new products in this space and expects to keep this trend alive even in the coming period. We anticipate this trend to continue even in 2016 based on its very active pipeline updates, acquisition targets, strategic partnerships and innovative thinking.

Another important growth catalyst in this niche is the company’s recent acquisition and inclusion of Ellipse Technologies and its products, focused on developing procedural solutions for complex skeletal deformity.

On the flip side, pricing continues to be a major headwind for NuVasive. For 2016, the company projects a negative 1% pricing impact on gross margin, which is relatively consistent with last year’s trend. The competitive landscape also remains tough.

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