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Why Is Nevro (NVRO) Down 16% 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 lost about 16% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Nevro due for a breakout? 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 catalysts.

Nevro  Q4 Loss Narrower Than Estimated, Revenues Miss

Nevro Corp reported fourth-quarter 2020 loss per share of 21 cents, narrower than the Zacks Consensus Estimate of a loss of 35 cents. The bottom line also compared favorably with the year-ago quarter’s loss per share of 44 cents.

For 2020 too, loss per share narrowed to $2.47 from the Zacks Consensus Estimate of a loss of $2.62 as well as the year-ago quarter’s loss per share of $3.37.

Revenues

Revenues of $109.7 million missed the Zacks Consensus Estimate by 1%. The top line also fell 4.1% year over year.

Meanwhile, for 2020, revenues came in at $362 million, in line with the Zacks Consensus Estimate. The figure, however, fell 7.3% year over year.

Quarterly Highlights

In the quarter under review, international revenues were $15.1 million, down 8% year over year on a reported basis and 14% atconstant currency.U.S. revenues for the quarter totaled $94.6 million, down 3% year over year. This downside was due to resurgence of COVID-19 in the latter half of the fourth quarter. 

Margins

Gross profit totaled $78 million, down 3.9% year over year. Gross margin was 71.1%, up 6 basis points (bps).

Total operating expenses fell 15.1% year over year to $78.9 million.

Loss from operations was $0.9 million, narrower than the year-ago quarter’s loss of $11.7 million.

Guidance

Nevro projects first quarter of 2021 global revenues in the range of $84-$86 million. The Zacks Consensus Estimate for the same is pegged at $93.7 million.

For 2021, the company expects total revenues in the range of $430-$450 million. The Zacks Consensus Estimate for the same is pegged at $450.4 million.

Cash Position

The company exited the fourth quarter with cash and cash equivalents of $44.6 million compared with$65.4 million at the end of year ago period.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -40.44% due to these changes.

VGM Scores

Currently, Nevro has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Nevro has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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