On Wednesday, Nevro Corp (NYSE:NVRO) experienced a setback as Piper Sandler adjusted its price target for the medical device company's shares, reducing it from $12.00 to $7.00. Despite this change, the firm maintained its Underweight rating.
The revision was prompted by Nevro's recently announced second-quarter results and updated financial guidance, which did not meet market expectations.
The company reported quarterly revenue of $104.2 million, falling short of the consensus estimate of $107.1 million. Although its adjusted EBITDA was relatively consistent with predictions, the more significant concern arose from Nevro's revision of its full-year 2024 revenue forecast.
The new guidance suggests a year-over-year decrease of 5% to 6%, with expected revenues ranging between $400 million and $405 million. This is a notable reduction from the previously projected range of $435 million to $445 million.
Furthermore, Nevro has revised its full-year guidance for adjusted EBITDA downwards and provided a third-quarter outlook that was less optimistic than analysts had anticipated prior to the company's earnings call.
The company attributed these challenges to increased competitive pressures in the Spinal Cord Stimulation (SCS) market, as well as a persistent downturn in the U.S. SCS market.
In response to these difficulties, Nevro has announced that it is exploring a range of strategic alternatives. These could include forming partnerships, merging with other entities, or potentially selling the company. This exploration is a strategic move in light of the company's recent performance and market challenges.
Piper Sandler's revised price target reflects the impact of Nevro's latest financial updates and strategic considerations. The firm's analyst stated, "Altogether the Q2 update was a challenging one for NVRO and leads us to stick with our UW rating. Our PT moves to $7 (from $12)." This statement underscores the cautious stance Piper Sandler is taking in light of the company's current circumstances.
In other recent news, Nevro Corp has experienced a series of financial adjustments following its second-quarter performance. The company's sales fell short, leading RBC Capital to cut its share target from $16 to $7, while maintaining a Sector Perform rating.
Nevro Corp also revised its full-year 2024 revenue forecast downward by 8.5%, now expecting revenues between $400 million and $405 million. Analyst firms, JMP Securities and JPMorgan (NYSE:JPM), also downgraded Nevro Corp's stock due to these developments.
The company has been navigating a challenging U.S. spinal cord stimulation market, which has influenced these financial adjustments. Nevro Corp's management has acknowledged these pressures, leading to strategic reassessments and revised expectations. Despite these challenges, Nevro Corp reported an 8% organic growth and a significant 73% year-over-year increase in positive free cash flow.
In response to its first-quarter results, Nevro Corp has raised its full-year 2024 outlook, expecting gross revenue to be between $937 and $942 million, and adjusted earnings per share to be between $5.05 to $5.11. These recent developments reflect the ongoing financial dynamics of Nevro Corp and the differing perspectives of financial analysts.
InvestingPro Insights
In the wake of the recent financial updates from Nevro Corp (NYSE:NVRO), investors may be seeking additional context to better understand the company's position. According to real-time data from InvestingPro, Nevro's market capitalization stands at $319.17 million, with a negative P/E ratio of -3.81, reflecting the company's current lack of profitability. This is further emphasized by the adjusted P/E ratio for the last twelve months as of Q2 2024, which sits at -4.14. Despite the revenue growth of 1.59% over the last twelve months, the company's quarterly revenue has decreased by 4.27% in Q2 2024, indicating some challenges in sustaining growth.
InvestingPro Tips provide additional insights. Notably, Nevro holds more cash than debt, which could provide some financial flexibility in navigating the competitive pressures in the Spinal Cord Stimulation market. However, the company is quickly burning through cash, which is a significant concern given that analysts do not anticipate the company will be profitable this year. Moreover, with three analysts having revised their earnings downwards for the upcoming period, investors may want to approach the stock with caution. It's also worth noting that while Nevro's liquid assets exceed short-term obligations, the stock has experienced a considerable decline over the last week and the past six months.
For those looking to delve deeper into the financial health and future prospects of Nevro, InvestingPro offers a range of additional tips that can provide a more comprehensive analysis. Currently, there are 9 more InvestingPro Tips available that could help investors make more informed decisions.
The recent price target adjustment by Piper Sandler and the company's own revised financial forecasts highlight the importance of staying up-to-date with the latest data and expert analysis. The insights from InvestingPro, including the fair value estimates which stand at $11 by analysts and $14.01 by InvestingPro's own valuation, can serve as valuable tools for investors navigating the complexities of the market and the specific challenges faced by Nevro.
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