On Tuesday, Baird made an adjustment to the price target for Nevro Corp (NYSE:NVRO) shares, increasing it to $6.00 from the previous $5.00, while maintaining a Neutral rating on the stock.
The firm's analyst cited the ongoing business transformation at Nevro as a key factor, acknowledging that while the third quarter of 2024's revenue and EBITDA surpassed the Central Nervous System (CNS) segment's performance, the company's revenues were still approximately 5% lower than the full-year 2023 levels.
The analyst noted that there are not yet clear indicators that Nevro is on a path to stabilize or reaccelerate its growth. However, the report also highlighted a positive aspect of the company's operations, pointing out that operational expenditure (OpEx) reductions have set the stage for potential margin improvements in the fiscal year 2025.
This outlook is supported by the initial feedback from the limited HFX-iQ AdaptiveAI launch, which seems to suggest a decrease in the time sales representatives spend on reprogramming, addressing what has been identified as a significant challenge for Nevro and the Spinal Cord Stimulation (SCS) sector.
Despite these improvements, Baird's stance remains cautious due to the lack of clear evidence pointing towards revenue stabilization. The analyst emphasized that achieving leverage is challenging without more definitive signs of revenue stability. The neutral stance reflects Baird's wait-and-see approach to Nevro's performance, as the company continues to work through its transformation process and strives to demonstrate consistent growth.
In other recent news, Nevro Corp has experienced a series of key developments. The company's Q3 earnings report revealed a decrease in worldwide revenue by 6.7% to $96.9 million. However, the company's adjusted EBITDA loss was notably better than anticipated, reporting a loss of $1.8 million, a significant improvement attributed to effective cost-cutting measures. Despite these developments, Nevro has maintained its revenue guidance for the full year 2024.
In response to strong market competition, Nevro has turned its focus to artificial intelligence innovations, receiving FDA approval for its HFX iQ with HFX AdaptivAI technology. The company has also recognized the need for increased direct-to-consumer spending, following a 15.2% drop in US trial procedures during Q3.
Canaccord Genuity has adjusted its price target for Nevro to $7.00, down from the previous $8.00, while maintaining a Hold rating on the stock. This adjustment follows Nevro's Q3 earnings report and the analyst firm's assessment of the company's ongoing market challenges. These are among the recent developments for Nevro Corp.
InvestingPro Insights
Recent InvestingPro data provides additional context to Baird's analysis of Nevro Corp (NYSE:NVRO). The company's market capitalization stands at $198.35 million, reflecting its current valuation in the market. Nevro's revenue for the last twelve months as of Q2 2024 was $426.1 million, with a modest growth of 1.59% over the same period. However, the quarterly revenue growth for Q2 2024 showed a decline of 4.27%, aligning with Baird's observation of lower revenues compared to 2023 levels.
InvestingPro Tips highlight some challenges facing Nevro. The company is "quickly burning through cash" and is "not profitable over the last twelve months," which supports Baird's cautious stance. Additionally, the stock "has taken a big hit over the last six months," with a 45.66% price decline in that period. This performance underscores the market's current skepticism about Nevro's near-term prospects.
On a more positive note, Nevro is "trading at a low revenue valuation multiple," which could present an opportunity if the company's transformation efforts succeed. The company also "operates with a moderate level of debt," potentially providing some financial flexibility as it navigates its turnaround.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Nevro's financial health and market position.
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