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Here's Why You Should Hold on to Nevro (NVRO) Stock for Now
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Nevro Corp. (NVRO - Free Report) is well-poised for growth in the coming quarters, backed by its solid foothold in the Spinal Cord Stimulation ("SCS") market. A solid second-quarter 2022 performance, along with continued strength in its flagship Senza platform, is expected to contribute further. However, regulatory requirements and dependence on third-party payors persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 63.6% compared with the 30.9% fall of the industry and 12.2% decline of the S&P 500.
The renowned global medical device company has a market capitalization of $1.57 billion. The company projects 23.1% growth for 2022 and expects to maintain its strong performance. Nevro’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed the same in one and broke even in the other, the average earnings surprise being 5.7%.
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Let’s delve deeper.
Solid Foothold in SCS Market: Nevro’s foothold in the global SCS therapy business raises our optimism about the stock. During the second quarter of 2022, the company confirmed that more positive payer coverage updates for treatment of Painful Diabetic Neuropathy (PDN) from Several Blue Cross Blue Shield Insurers had been received, thereby adding nearly 23 million covered PDN lives.
The company, in March, announced that Noridian had released an update to its Local Coverage Billing and Coding article for spinal cord stimulators for chronic pain to include two new ICD-10 codes that cover PDN.
Strength in Senza: We are optimistic about Nevro’s continued strength in its flagship Senza platform. Based on analysis from the company’s SENZA- Randomized Controlled Trial (RCT) and European studies, as well as the SENZA-PDN and SENZA-NSRBP (non-surgical refractory back pain) RCTs, Nevro believes the 10 kHz therapy can be an attractive treatment option for patients. Due to the removal of paresthesia, the company believes that the 10 kHz therapy can also be effective for patients with chronic upper limb and neck pain.
Strong Q2 Results: Nevro’s better-than-expected second-quarter 2022 earnings buoy optimism. The company recorded improvement in overall top line and robust domestic revenues. Uptick in total U.S. permanent implant procedures and U.S. trial procedures, along with sequential improvement in U.S. PDN trial procedures were also seen. Expansion of the gross margin also bodes well.
Downsides
Dependence on Third-Party Payors: Nevro’s success in marketing its products largely depends on whether U.S. and international government health administrative authorities, private health insurers and other organizations adequately cover and reimburse customers for the cost of its products. Access to adequate coverage and reimbursement for SCS procedures using Senza by third-party payors is essential for the acceptance of Nevro’s products by its customers.
Regulatory Requirements: Nevro’s products are subject to extensive regulations in the United States and elsewhere, which are complex and have become more stringent over time. Regulatory changes could result in restrictions on Nevro’s ability to carry on or expand its operations, higher than anticipated costs or lower than anticipated sales.
Trend of Estimate Revisions
Nevro witnessed a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its loss per share has widened from $2.87 to $2.90.
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $99.3 million, suggesting a 6.5% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Patterson Companies, Inc. (PDCO - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.
AMN Healthcare has lost 9.9% compared with the industry’s 35.5% fall in the past year.
Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 7.9%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.
Patterson Companies has lost 6.4% compared with the industry’s 12.8% fall over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.9%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.
McKesson has gained 77.8% against the industry’s 12.8% fall over the past year.
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Here's Why You Should Hold on to Nevro (NVRO) Stock for Now
Nevro Corp. (NVRO - Free Report) is well-poised for growth in the coming quarters, backed by its solid foothold in the Spinal Cord Stimulation ("SCS") market. A solid second-quarter 2022 performance, along with continued strength in its flagship Senza platform, is expected to contribute further. However, regulatory requirements and dependence on third-party payors persist.
Over the past year, this Zacks Rank #3 (Hold) stock has lost 63.6% compared with the 30.9% fall of the industry and 12.2% decline of the S&P 500.
The renowned global medical device company has a market capitalization of $1.57 billion. The company projects 23.1% growth for 2022 and expects to maintain its strong performance. Nevro’s earnings surpassed the Zacks Consensus Estimate in two of the trailing four quarters, missed the same in one and broke even in the other, the average earnings surprise being 5.7%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Solid Foothold in SCS Market: Nevro’s foothold in the global SCS therapy business raises our optimism about the stock. During the second quarter of 2022, the company confirmed that more positive payer coverage updates for treatment of Painful Diabetic Neuropathy (PDN) from Several Blue Cross Blue Shield Insurers had been received, thereby adding nearly 23 million covered PDN lives.
The company, in March, announced that Noridian had released an update to its Local Coverage Billing and Coding article for spinal cord stimulators for chronic pain to include two new ICD-10 codes that cover PDN.
Strength in Senza: We are optimistic about Nevro’s continued strength in its flagship Senza platform. Based on analysis from the company’s SENZA- Randomized Controlled Trial (RCT) and European studies, as well as the SENZA-PDN and SENZA-NSRBP (non-surgical refractory back pain) RCTs, Nevro believes the 10 kHz therapy can be an attractive treatment option for patients. Due to the removal of paresthesia, the company believes that the 10 kHz therapy can also be effective for patients with chronic upper limb and neck pain.
Strong Q2 Results: Nevro’s better-than-expected second-quarter 2022 earnings buoy optimism. The company recorded improvement in overall top line and robust domestic revenues. Uptick in total U.S. permanent implant procedures and U.S. trial procedures, along with sequential improvement in U.S. PDN trial procedures were also seen. Expansion of the gross margin also bodes well.
Downsides
Dependence on Third-Party Payors: Nevro’s success in marketing its products largely depends on whether U.S. and international government health administrative authorities, private health insurers and other organizations adequately cover and reimburse customers for the cost of its products. Access to adequate coverage and reimbursement for SCS procedures using Senza by third-party payors is essential for the acceptance of Nevro’s products by its customers.
Regulatory Requirements: Nevro’s products are subject to extensive regulations in the United States and elsewhere, which are complex and have become more stringent over time. Regulatory changes could result in restrictions on Nevro’s ability to carry on or expand its operations, higher than anticipated costs or lower than anticipated sales.
Trend of Estimate Revisions
Nevro witnessed a negative estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its loss per share has widened from $2.87 to $2.90.
The Zacks Consensus Estimate for the company’s third-quarter 2022 revenues is pegged at $99.3 million, suggesting a 6.5% improvement from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Patterson Companies, Inc. (PDCO - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.7%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has lost 9.9% compared with the industry’s 35.5% fall in the past year.
Patterson Companies, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 7.9%. PDCO’s earnings surpassed estimates in all the trailing four quarters, the average beat being 16.5%.
Patterson Companies has lost 6.4% compared with the industry’s 12.8% fall over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 9.9%. MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 13%.
McKesson has gained 77.8% against the industry’s 12.8% fall over the past year.