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Why Is Nevro (NVRO) Up 9.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for Nevro (NVRO - Free Report) . Shares have added about 9.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Nevro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Nevro Q3 Loss Narrower Than Expected, 2019 Guidance Raised

Nevro reported third-quarter 2019 loss of 58 cents per share, narrower than the Zacks Consensus Estimate of a loss of 85 cents. The company had incurred a loss of 37 cents in the year-ago quarter.

The company posted revenues of $100.2 million, which surpassed the Zacks Consensus Estimate by 6.2%. The figure also rose 4.7% year over year.

Quarter Highlights

In the quarter under review, international revenues were $16 million, flat year over year but up 5% at constant currency.

U.S. revenues for the quarter totaled $100.2 million, up 5% year over year. The upside was primarily driven by SCS procedure growth.

Additionally, U.S. patient trials and permanent implants each grew 18% on a year-over-year basis. The company also launched the Senza Omnia SCS System commercially in the United States.

Margins

Gross profit totaled $69.9 million, up 4% year over year. Gross margin was 69.8%, down 50 basis points.

Operating expenses rose 12.3% year over year to $85.9 million. Research and development expenses totaled $13 million, up 4.3% year over year.

Sales, general and administrative expenses were up 13.9% year over year to $72.9 million.

Guidance

Nevro raised its revenue guidance for 2019.

The company now expects revenues in the range of $368-$374 million compared with the previous expectation of $383-$386 million.

Gross margin is expected in the range of 68-70% as a percentage of revenues.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 9.56% due to these changes.

VGM Scores

At this time, Nevro has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Nevro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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