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Why Is Nevro (NVRO) Down 34.3% Since Last Earnings Report?

Zacks Equity Research

It has been about a month since the last earnings report for Nevro (NVRO). Shares have lost about 34.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Nevro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Nevro Q4 Loss Narrower Than Expected, Guidance Solid

 

Nevro Corp. reported fourth-quarter 2019 loss of 44 cents per share, narrower than the Zacks Consensus Estimate of a loss of 62 cents. The company had incurred a loss of 32 cents in the year-ago quarter.

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Revenues were $114.4 million, which surpassed the Zacks Consensus Estimate by 3.2%. The figure also rose 6% year over year.

 

Quarter Highlights

 

In the quarter under review, international revenues were $16.5 million, up 1% year over year and 3% at constant currency.

 

U.S. revenues for the quarter totaled $97.9 million, up 7% year over year. Per management, revenues gained from the 17% year-over-year growth in U.S. trials and 20% increase in permanent implant.

 

Margins

 

Gross profit totaled $81.3 million, up 6.7% year over year. Gross margin was 71%, up 50 basis points.

 

Operating expenses rose 9.7% year over year to $92.9 million. Research and development expenses totaled $16.9 million, up 25.6%.

 

Sales, general and administrative expenses rose 6.6% to $76 million.

 

Loss from operations was $11.7 million, compared with a loss of $8.6 million in the year-ago quarter.

 

Guidance

 

Nevro Corp. expects 2020 revenues within $435-$440 million.

 

Gross margin is projected in the range of 69-70% and operating expenses are expected at around $355 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 22.08% due to these changes.

VGM Scores

At this time, Nevro has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nevro has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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