On Tuesday, Piper Sandler adjusted its outlook on Nevro Corp (NYSE: NYSE:NVRO) shares, reducing the price target to $6 from the previous $7 while retaining an Underweight rating on the stock. The firm acknowledged Nevro's third-quarter earnings, which surpassed consensus expectations, with reported revenue of $96.9 million exceeding the anticipated figures of $92 million and $93 million.
The adjusted EBITDA highlighted a significant positive, recording at -$1.8 million, which was notably better than the consensus estimate of -$9.6 million.
Nevro's financial performance for the third quarter also included the maintenance of its full-year 2024 revenue guidance, which remains unchanged at $400 million to $405 million. Moreover, the company improved its adjusted EBITDA forecast to a range of -$16 million to -$18 million, an enhancement from the previous range of -$18 million to -$20 million. Despite these positive adjustments, concerns remain regarding the company's growth trajectory.
The report indicated a -7.5% decline in Nevro's U.S. SCS franchise, with the U.S. core SCS performance even lower. Furthermore, Nevro reported a continued downturn in U.S. trial procedures, which saw a year-over-year decrease of -15.2% in the third quarter. While the improvement in adjusted EBITDA was noted as a positive development, the overarching concern about the company's potential for growth persists.
In summary, Piper Sandler's revised price target reflects a cautious stance on Nevro's future growth, despite the third-quarter earnings surpassing expectations and an improved adjusted EBITDA outlook. The firm's analysis suggests that while near-term financials have shown resilience, the underlying challenges in the U.S. market could impede Nevro's growth prospects.
In other recent news, Nevro Corp has seen a range of adjustments to its stock targets by several analyst firms. Baird has increased Nevro Corp's price target to $6, maintaining a neutral rating due to potential margin improvements in 2025. Canaccord Genuity has cut Nevro Corp's price target to $7 from $8, maintaining a hold rating, following the company's Q3 earnings report and ongoing market challenges.
Nevro Corp's Q3 earnings report showcased revenues of $96.9 million and an adjusted EBITDA loss of $1.8 million, surpassing consensus expectations. Despite a decrease in worldwide revenue and U.S. spinal cord stimulation trial procedures, the company reported improvements in its net loss from operations and adjusted EBITDA. The company continues to target expansion in the underpenetrated painful diabetic neuropathy (PDN) market, leveraging promising clinical study results.
The company has also introduced its AI-driven HFX iQ with HFX AdaptivAI technology and plans to grow its SI joint fusion business, with meaningful contributions expected starting in 2025. Full-year revenue guidance remains at approximately $400 million to $405 million, reflecting a 5-6% decrease from 2023. Nevro Corp anticipates improved cash flow in Q4 2024 due to restructuring and working capital management. These are some of the recent developments with Nevro Corp.
InvestingPro Insights
Recent InvestingPro data provides additional context to Nevro Corp's financial situation, aligning with Piper Sandler's cautious outlook. The company's market capitalization stands at $198.35 million, reflecting its current market valuation. Nevro's revenue for the last twelve months as of Q2 2024 was $426.1 million, with a modest growth of 1.59% over the same period. However, the quarterly revenue growth for Q2 2024 showed a decline of 4.27%, consistent with the challenges noted in the U.S. SCS franchise.
InvestingPro Tips highlight that Nevro is "quickly burning through cash" and "not profitable over the last twelve months," which corroborates the concerns about the company's growth trajectory. The stock's performance has been notably weak, with a 45.66% decline over the past six months, further emphasizing the market's skepticism about Nevro's prospects.
Despite these challenges, InvestingPro Tips also point out that Nevro "operates with a moderate level of debt" and its "liquid assets exceed short-term obligations," suggesting some financial stability amidst the growth concerns. For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide deeper insights into Nevro's financial health and market position.
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