It has been about a month since the last earnings report for NuVasive, Inc. . Shares have added about 3.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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.
Recent Earnings
NuVasive reported fourth-quarter 2016 adjusted earnings per share (EPS) of $0.53, reflecting a 51.4% surge from the year-ago quarter. The figure also surpassed the Zacks Consensus Estimate by 6%.
Solid revenue growth primarily led to the year-over-year improvement in earnings.
Including one-time items, the company reported fourth-quarter 2016 net income per share of $0.11, down 50% from $0.22 in the year-ago quarter.
Full-year 2016 adjusted EPS was $1.66, up 26.7% from the year-ago period and also higher than the Zacks Consensus Estimate by $0.02.
Revenues in the reported quarter increased 25.9% year over year to $271.1 million (up 25.5% at constant exchange rate or (CER), surpassing the Zacks Consensus Estimate of $263 million. The upside was driven by strong procedural growth in the U.S. as well as solid performance in international market.
Net sales in 2016 came in at $962.1 million, up 18.6% from 2015 (up 18.4% at CER). The figure also surpassed the Zacks Consensus Estimate of $953.6 million.
In the reported quarter, International business grew 45% year over year (up 42% at CER). Growth was backed by strong contributions from core direct markets including Japan, Australia, New Zealand, the U.K., Italy and Germany.
The company reported an 88 bps contraction in gross margin to 75.3% in the fourth quarter. Despite the 24.5% rise in gross profit to $204.2 million, a 30.6% increase in cost of goods sold to $66.9 million impacted margins. Sales, marketing and administrative expenses went up 19.8% to $142.4 million, while research and development expenses increased 50.8% to $12.9 million.
NuVasive posted adjusted operating income of $48.7 million in the reported quarter, reflecting a 33.3% rise from the year-ago number. Adjusted operating margin expanded 99 bps to 17.9% in the reported quarter.
The company exited fiscal 2016 with cash, cash equivalents and short-term investments of $153.6 million, down from $357.7 million in the prior year.
Outlook
NuVasive has provided full-year 2017 guidance, taking the integration effect of NSO and Biotronic into consideration.
The company currently expects 2017 revenues to grow double digits at 10.7% or 11.7% on a constant currency basis to approximately $1.065 billion, which is above the current Zacks Consensus Estimate of $1.06 billion.
NuVasive has also provided its guidance for full-year 2017 adjusted earnings per share at $2.00, up 20% from the 2016 number. The current Zacks Consensus Estimate of $2.07 is slightly above the company’s guidance. Additionally, adjusted operating margin for the year is projected at 17.1%, up 100 bps on a year-over-year basis.
For first-quarter 2017, management expects revenues of around $250 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 11.11% due to these changes.
VGM Scores
At this time, NuVasive's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. The stock was allocated a grade of 'C' on the value side, putting it in the middle 20% 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.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is NuVasive (NUVA) Up 3.1% Since the Last Earnings Report?
It has been about a month since the last earnings report for NuVasive, Inc. . Shares have added about 3.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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.
Recent Earnings
NuVasive reported fourth-quarter 2016 adjusted earnings per share (EPS) of $0.53, reflecting a 51.4% surge from the year-ago quarter. The figure also surpassed the Zacks Consensus Estimate by 6%.
Solid revenue growth primarily led to the year-over-year improvement in earnings.
Including one-time items, the company reported fourth-quarter 2016 net income per share of $0.11, down 50% from $0.22 in the year-ago quarter.
Full-year 2016 adjusted EPS was $1.66, up 26.7% from the year-ago period and also higher than the Zacks Consensus Estimate by $0.02.
Revenues in the reported quarter increased 25.9% year over year to $271.1 million (up 25.5% at constant exchange rate or (CER), surpassing the Zacks Consensus Estimate of $263 million. The upside was driven by strong procedural growth in the U.S. as well as solid performance in international market.
Net sales in 2016 came in at $962.1 million, up 18.6% from 2015 (up 18.4% at CER). The figure also surpassed the Zacks Consensus Estimate of $953.6 million.
In the reported quarter, International business grew 45% year over year (up 42% at CER). Growth was backed by strong contributions from core direct markets including Japan, Australia, New Zealand, the U.K., Italy and Germany.
The company reported an 88 bps contraction in gross margin to 75.3% in the fourth quarter. Despite the 24.5% rise in gross profit to $204.2 million, a 30.6% increase in cost of goods sold to $66.9 million impacted margins. Sales, marketing and administrative expenses went up 19.8% to $142.4 million, while research and development expenses increased 50.8% to $12.9 million.
NuVasive posted adjusted operating income of $48.7 million in the reported quarter, reflecting a 33.3% rise from the year-ago number. Adjusted operating margin expanded 99 bps to 17.9% in the reported quarter.
The company exited fiscal 2016 with cash, cash equivalents and short-term investments of $153.6 million, down from $357.7 million in the prior year.
Outlook
NuVasive has provided full-year 2017 guidance, taking the integration effect of NSO and Biotronic into consideration.
The company currently expects 2017 revenues to grow double digits at 10.7% or 11.7% on a constant currency basis to approximately $1.065 billion, which is above the current Zacks Consensus Estimate of $1.06 billion.
NuVasive has also provided its guidance for full-year 2017 adjusted earnings per share at $2.00, up 20% from the 2016 number. The current Zacks Consensus Estimate of $2.07 is slightly above the company’s guidance. Additionally, adjusted operating margin for the year is projected at 17.1%, up 100 bps on a year-over-year basis.
For first-quarter 2017, management expects revenues of around $250 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted lower by 11.11% due to these changes.
NuVasive, Inc. Price and Consensus
NuVasive, Inc. Price and Consensus | NuVasive, Inc. Quote
VGM Scores
At this time, NuVasive's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. The stock was allocated a grade of 'C' on the value side, putting it in the middle 20% 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.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.