On Wednesday, an analyst from Jefferies revised the price target for Nevro Corp (NYSE:NVRO), a medical device company, from $14.00 to $10.00 while maintaining an Underperform rating on the stock. This adjustment follows the company's first-quarter revenue report, which showed an increase of 5.6% on a constant currency basis, with revenues reaching $101.9 million compared to the consensus estimate of $98.1 million.
The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first quarter was reported at a loss of $9.6 million, which was an improvement over the anticipated consensus of a $15.6 million loss. Nevro also confirmed its sales guidance for 2024, projecting revenues between $435 million and $445 million, which aligns with the consensus estimate of $441 million.
In addition to reaffirming their sales forecast, Nevro has updated its EBITDA outlook for 2024. The company now expects EBITDA to range from a loss of $5 million to a profit of $2 million. This is a positive shift from the previous forecast of a loss between $8 million and $14 million, and it stands in contrast to the consensus projection of a $12 million loss.
Despite these seemingly positive financial indicators, the analyst expressed ongoing concerns regarding Nevro's core spinal cord stimulation (SCS) business and its overall profitability.
This stance is reflected in the decision to maintain the Underperform rating even after the company reported earnings that surpassed expectations. The analyst noted that the updated numbers and price target are in response to the recent financial results and the persistent concerns surrounding the company's performance.
InvestingPro Insights
As Nevro Corp (NYSE:NVRO) navigates the challenges of its spinal cord stimulation business, real-time financial metrics from InvestingPro offer a glimpse into the company's current standing. Nevro's market capitalization sits at $422.94 million, reflecting investor valuation of the company. Despite the revenue growth of 4.63% in the last twelve months as of Q4 2023, Nevro's profitability remains a concern, with a negative P/E ratio of -4.43. This is consistent with analysts' expectations that the company will not be profitable this year. The company's strong gross profit margin of 68.22% indicates effective cost management relative to its revenues.
From an investment standpoint, two InvestingPro Tips highlight critical financial aspects: Nevro holds more cash than debt on its balance sheet, which could offer some financial flexibility. However, the company is quickly burning through cash, which investors should monitor closely. Additionally, despite a significant return over the last week, Nevro does not pay a dividend to shareholders, focusing its resources on business operations and growth strategies.
For those seeking a deeper analysis, InvestingPro provides further insights into Nevro's financial health and future prospects. With additional tips available on the platform, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering a comprehensive toolkit for informed decision-making.
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