On Wednesday, Canaccord Genuity adjusted its outlook on Nevro Corp (NYSE:NVRO), reducing the price target to $8.00 from the previous $11.00, while keeping a Hold rating on the stock.
This decision came after Nevro reported a second-quarter performance that fell short of expectations and subsequently lowered its full-year 2024 guidance.
Nevro's second-quarter revenue was reported at $104.2 million, marking a 4.3% year-over-year decline, and missing both Canaccord's estimate of $108.0 million and the consensus of $108.1 million.
Despite the revenue shortfall, the company's adjusted EBITDA of $3.0 million exceeded the anticipated loss of $2.9 million by Canaccord and the consensus loss estimate of $3.2 million.
The lowered financial outlook for FY24 is attributed to persistent weakness in Nevro's core U.S. Spinal Cord Stimulation (SCS) market. The company anticipates this trend to continue without improvement in U.S. SCS trials for the remainder of the year, facing increasing competitive challenges.
In response to the current market conditions, Nevro has engaged advisors to aggressively explore strategic alternatives beyond its existing standalone strategy. This could include the potential sale of the company, although Canaccord does not identify a clear buyer for the asset at this time.
Nevro is also seeking to stimulate long-term growth by expanding its presence earlier in the pain management process, potentially through mergers and acquisitions or internal research and development. Detailed plans are expected to be revealed following the strategic review process.
Despite the challenging path ahead for Nevro, with a slowing core market and heightened competition, Canaccord maintains its Hold rating but has adjusted the price target to reflect the company's recent performance and market position.
InvestingPro Insights
As Nevro Corp (NYSE:NVRO) navigates through a challenging period marked by declining revenue and strategic reassessments, real-time data and expert analysis from InvestingPro provide additional context for investors. Nevro's market capitalization stands at $319.17 million, reflecting the market's current valuation of the company. Despite a tough quarter, Nevro's balance sheet shows resilience with cash holdings surpassing debt, which may offer some financial flexibility as the company explores strategic alternatives.
InvestingPro Tips highlight that analysts have recently revised their earnings expectations downwards, indicating potential concerns about Nevro's near-term profitability. Moreover, the company's stock has experienced significant volatility, with a notable decline over the last week and a six-month price total return of -49.45%, emphasizing the impact of the current market conditions on investor sentiment.
For investors seeking a comprehensive view of Nevro's financial health and future prospects, InvestingPro offers additional insights, including 8 more tips that could guide investment decisions. To explore these further, visit https://www.investing.com/pro/NVRO.
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