On Wednesday, Canaccord Genuity adjusted its outlook on Nevro Corp shares (NYSE:NVRO), a medical device company, by reducing the price target to $11 from the previous $17, while maintaining a Hold rating on the stock.
The firm's decision follows Nevro's reported first-quarter results for 2024, which surpassed both Canaccord Genuity's and Wall Street's revenue estimates. Nevro's Q1 revenue reached $101.9 million, outpacing Canaccord's projection of $97.2 million and the Street's $97.9 million forecast.
The company's revenue boost was attributed to increased average selling prices (ASP) for its HFX iQ system and the trend of long-term Nevro patients upgrading to newer implant systems. Despite the positive revenue outcome, the analyst from Canaccord Genuity revised the price target downward, factoring in the company's financial outlook and strategic initiatives.
Nevro reiterated its full-year 2024 revenue guidance, which remains between $435 million and $445 million, aligning with prior estimates. Moreover, the company has upgraded its adjusted EBITDA guidance from a previous range, now expecting a loss of $5 million to a gain of $2 million, following cost-saving measures implemented in April 2024.
The second-quarter guidance was set lower than anticipated, but management is confident that the strong performance in the first quarter will balance the softer expectations for the second quarter.
The company is also preparing to expand its product portfolio with Vyrsa, focusing on sacroiliac (SI) joint products, although this is not expected to significantly impact the current year's revenue. Nevro is actively training its sales representatives and physicians to incorporate these products and stimulate further revenue growth.
In their corporate strategy review, Nevro's management emphasized their commitment to three key areas: commercial execution through sales force leverage, deeper market penetration via new FDA indications and clinical data, and enhancing profitability.
The company has decided to pause its PDN-Sensory study, believing that the current enrollment will yield robust results that could potentially alter treatment guidelines. Still, the timing for the release of this data was not disclosed. Canaccord's revised price target reflects these strategic considerations and the financial guidance provided by Nevro.
InvestingPro Insights
Recent data from InvestingPro sheds light on Nevro Corp's financial health and market performance. With a market capitalization of $422.94 million, the company is navigating a challenging landscape, underscored by a negative P/E ratio of -4.43 for the last twelve months as of Q4 2023.
This aligns with analysts' expectations that Nevro will not be profitable this year. Despite this, Nevro's gross profit margin remains strong at 68.22%, indicating effective cost management relative to its revenue, which stood at $425.17 million over the same period.
InvestingPro Tips highlight that while Nevro holds more cash than debt, it is quickly burning through its reserves. This is a critical factor for investors considering the company's cash flow sustainability. Still, it is noteworthy that Nevro's liquid assets exceed its short-term obligations, suggesting short-term financial stability.
In the market, the company has experienced a significant return over the last week, with a 10.76% increase in price total return, though it's important to note the broader context of a 57.98% decrease over the past year.
For investors seeking a deeper dive into Nevro's financials and future prospects, there are additional InvestingPro Tips available at https://www.investing.com/pro/NVRO. To enhance your investment analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are currently 6 more InvestingPro Tips that could give you a more comprehensive understanding of Nevro's potential and risks.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.