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Why Is Nevro (NVRO) Up 14.9% Since Last Earnings Report?

A month has gone by since the last earnings report for Nevro (NVRO). Shares have added about 14.9% 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 Earnings Beat Estimates, 2022 View Revised

Nevro reported an adjusted loss per share of 62 cents for the third quarter of 2022, narrower than the loss of 87 cents reported in the year-ago quarter. Loss per share was narrower than the Zacks Consensus Estimate of a loss of 71 cents.

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GAAP earnings per share was $2.22 in the third quarter against the year-earlier loss of $1.44 per share.

Revenues in Detail

Nevro registered worldwide revenues of $100.5 million in the third quarter, up 7.8% year over year on a reported basis. The figure exceeded the Zacks Consensus Estimate by 1.4%.

At constant exchange rate (CER), revenues were up 10% year over year.

Worldwide revenues in the reported quarter include approximately $13.4 million of PDN revenues, representing 13% of worldwide permanent implant procedures.

Quarterly Highlights

In the quarter under review, international revenues were $14.3 million, down 5% year over year on a reported basis. At CER, international revenues improved 8%.

International revenues, especially in the UK, continued to be impacted by COVID-related issues and foreign-currency headwinds throughout the quarter.

U.S. revenues for the quarter totaled $86.1 million, up 10% year over year. Total U.S. permanent implant procedures increased 16%, while U.S. trial procedures increased 16%.

U.S. PDN trial procedures grew by 22% sequentially.

Margin Trend

In the quarter under review, Nevro’s gross profit rose 7.2% to $69.3 million. Gross margin, however, contracted 36 basis points (bps) to 68.9%.

Sales, general & administrative expenses fell 1.7% to $78.2 million. Research and development expenses went up 21.4% year over year to $14 million. Adjusted operating expenses of $92.2 million increased 1.3% year over year.

Adjusted operating loss in the reported quarter totaled $22.9 million compared with adjusted operating loss of $26.4 million in the year-ago quarter.

Financial Position

Nevro exited third-quarter 2022 with cash and cash equivalents, and short-term investments of $386.9 million compared with $310.8 million at the end of the second quarter. Long-term debt at the end of third-quarter 2022 was $186.6 million compared with $186.3 million at the end of the second quarter.

As of Sep 30, 2022, 290,000,000 shares were authorized, 36,107,515 shares issued and 35,424,599 shares were outstanding.

Guidance

Nevro issued its financial outlook for the fourth quarter of 2022 and revised the same for the full year.

The company now expects its full-year 2022 worldwide revenues to be in the range of $403 million to $407 million, narrowed from the earlier projections of $400 million-$410 million (reflecting growth of 3-6% from the comparable reported figure of 2021. The Zacks Consensus Estimate for the same is pegged at $404.5 million.

Full-year 2022 worldwide revenue guidance includes approximately $45 million-$47 million of PDN revenues, up from the previous projection of $42 million-$45 million of PDN revenues.

For the fourth quarter, Nevro expects a revenue uptick of 8-11%. The Zacks Consensus Estimate for the same reflects an improvement of 10.3%.

At CER, fourth-quarter revenues are expected to reflect growth of 9-13%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Nevro has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, 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 B. 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 looks promising. Notably, Nevro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Nevro is part of the Zacks Medical - Instruments industry. Over the past month, Fresenius (FMS), a stock from the same industry, has gained 15.4%. The company reported its results for the quarter ended September 2022 more than a month ago.

Fresenius reported revenues of $5.14 billion in the last reported quarter, representing a year-over-year change of -1.9%. EPS of $0.40 for the same period compares with $0.55 a year ago.

Fresenius is expected to post earnings of $0.22 per share for the current quarter, representing a year-over-year change of -56.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -35.9%.

Fresenius has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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Nevro Corp. (NVRO) : Free Stock Analysis Report

Fresenius Medical Care AG & Co. KGaA (FMS) : Free Stock Analysis Report

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