Why Is Nevro (NVRO) Up 37.7% Since Last Earnings Report?

A month has gone by since the last earnings report for Nevro (NVRO). Shares have added about 37.7% 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 its most recent earnings report in order to get a better handle on the important drivers.

Nevro Q2 Loss Wider Than Expected, ’19 Guidance Positive

Nevro Corp. reported second-quarter 2019 loss of 91 cents per share, wider than the Zacks Consensus Estimate of a loss of 89 cents. The company had incurred loss per share of 35 cents in the year-ago quarter.

The company posted revenues of $93.6 million, outpacing the Zacks Consensus Estimate of $88 million. The figure also surpassed the company’s expectations. However, revenues dropped 2.6% year over year.

Quarter Highlights

In the quarter under review, international revenues were $15.5 million, down 4% year over year but up 2% at constant currency (cc).

U.S. revenues for the quarter totaled $78.1 million, reflecting a 2% year-over-year drop. The decline was due to the company’s decision to diminish the impact of high volume product orders in the quarter.

Margins

Gross profit totaled $63.9 million, down 5.6% year over year. Gross margin was 68.3%, down 240 basis points.

Operating expenses rose 18.9% year over year to $90.5 million. Research and development expenses totaled $14.9 million, up 30.8% year over year.
Sales, general and administrative expenses were up 16.8% year over year to $75.6 million.

Guidance

For 2019, Nevro Corp. expects worldwide revenues between $368 million and $374 million.

How Have Estimates Been Moving Since Then?

Estimates revision followed an upward path over the past two months. The consensus estimate has shifted 7.21% 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 an F. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Nevro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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