On Wednesday, Morgan Stanley (NYSE:MS) adjusted its outlook on Nevro Corp (NYSE:NVRO) shares, reducing the price target to $14 from the previous $19 while maintaining an equal-weight rating.
The firm's analyst cited the company's recent financial performance, acknowledging a satisfactory quarter that surpassed expectations in terms of sales and profitability.
Despite the positive note on Nevro's recent results, the analyst pointed out that the company's guidance for the second quarter indicates weaker sales.
However, the unchanged full-year guidance suggests that a stronger performance is expected in the second half of the year. The analyst believes that achieving the annual targets set by Nevro is feasible.
The decision to lower the price target reflects a more cautious stance on the stock's near-term potential, aligning with the projected softer sales in the upcoming quarter.
Even with this reduced target, the firm's equal-weight rating indicates that the analyst views the stock as adequately valued at its current level, considering the company's prospects and the overall market conditions.
Nevro Corp, which specializes in medical devices, has been under scrutiny by investors as they assess the company's ability to meet its financial goals amidst a dynamic healthcare market. The revised price target from Morgan Stanley provides a new benchmark for investors monitoring the stock.
InvestingPro Insights
As investors digest the revised outlook from Morgan Stanley on Nevro Corp, current real-time data from InvestingPro provides a deeper financial context. Nevro's market capitalization stands at $422.94 million, with a negative P/E ratio of -4.43, reflecting the company's current lack of profitability. Despite this, the company has demonstrated a significant return over the last week, with a 10.76% price total return, potentially indicating investor optimism or a market reaction to recent events.
From an operational standpoint, Nevro's gross profit margin for the last twelve months as of Q4 2023 is a robust 68.22%, a testament to the company's ability to maintain profitability on its products despite broader financial challenges. However, it's important to note that Nevro is quickly burning through cash, a concern for long-term sustainability. This is underscored by the company's operating income margin of -23.36%, which suggests that expenses significantly outstrip income at present.
InvestingPro Tips highlight that while Nevro holds more cash than debt, signaling a degree of financial stability, the company is not anticipated to be profitable this year, and it does not pay a dividend to shareholders. Additionally, with liquid assets exceeding short-term obligations, Nevro appears to be in a position to meet its immediate financial commitments.
For those looking to delve further into Nevro's financial health, additional analysis and tips are available on InvestingPro. With a total of seven InvestingPro Tips for Nevro, investors can gain a more nuanced understanding of the company's financial position. To assist with this, take advantage of the exclusive offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, providing access to a wealth of financial data and expert insights.
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