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NuVasive Hits New 52-Week High: What's Driving the Stock?

Zacks Equity Research

Shares of NuVasive, Inc. NUVA reached a new 52-week high of $75.07 on Dec 6, closing the session marginally lower at $74.75. The stock has rallied 12.5% since its third-quarter 2019 earnings announcement on Oct 30.

The company’s robust overall and segmental revenue growth in the third quarter prompted the rally.

Let us delve deeper.

Q3 Performance

NuVasive exited the third quarter on a promising note, with better-than-expected revenues. Both of its segments witnessed year-over-year improvements in revenues. The EMEA region witnessed a solid uptick, driven by substantial contributions from the U.K. and Spain.

 


 

The robust performance was driven by a solid uptick in case volume, and tangible growth in both XLIF and ALIF franchises, led by the continued adoption of NuVasive's X360 system. Robust sales in some of the key international markets also buoy optimism.

Other Growth Drivers

Product Launches: We are particularly upbeat about NuVasive’s slew of recent product launches within the spine business, which includes Modulus XLIF and Modulus Cervical. Within the Advanced Materials Science (AMS) portfolio, the company launched Modulus TLIF-A and Modulus TLIF-O porous titanium spine implants, designed for the transforaminal lumbar interbody fusion (TLIF) procedure. It also introduced the X360 system, integrated with Pulse, for lateral single-position surgery.

The company received the FDA 510(k) clearance for expanded indications for the CoRoent Small Interlock system. The expanded use will allow on-label use of the device at multiple contiguous levels from C2-T1 for anterior cervical discectomy and fusion (ACDF) procedures compared with other systems on the market, which cleared for only one or two-level use.

Strong International Business: Investors are optimistic about NuVasive's robust international growth potential. In the last reported quarter, the company registered 13.4% international revenue growth at CER. The EMEA region witnessed a solid uptick, driven by substantial contributions from the U.K. and Spain. In the Asia Pacific, Japan delivered sturdy top-line growth despite several near-term challenges. The company expects the momentum to continue in the fourth quarter as well.

Stable Liquidity: NuVasive exited the third quarter of 2019 with cash and cash equivalents of $163.4 million compared with $128.4 million at the end of the second quarter. Year to date, net cash provided by operating activities has totaled $160.6 million compared with $150.5 million recorded a year ago.

Zacks Rank & Other Key Picks

Currently, NuVasive carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the broader medical space are Haemonetics Corporation HAE, National Vision Holdings, Inc EYE and ResMed Inc RMD.

Haemonetics currently has a Zacks Rank #2 and a projected long-term earnings growth rate of 13.5%.

National Vision’s long-term earnings growth rate is estimated at 17.8%. The company currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

ResMed’s long-term earnings growth rate is estimated at 12.9%. It currently flaunts a Zacks Rank #1.

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