NuVasive (NUVA) is $1.5 billion medical device company specializing in products for the surgical treatment of spine disorders. NUVA’s main platform, Maximum Access Surgery (MAS), allows the surgeon to perform minimally invasive surgery on the spine while minimizing tissue disruption and enabling safe navigation of the body’s nerve anatomy.
NuVasive was founded in 1997, began commercial sales in 2001 and has grown revenues from approximately $100 million in 2006 to $619 million in 2012.
Last week, NUVA reported strong third quarter results with sales up 14% to $169 million and profits beating the Street by over 100% with EPS of $0.28 vs. the consensus of $0.13. NuVasive’s management raised its 2013 guidance to $670 million in sales from $655 million previously and bumped EPS expectations by about 14%.
Room to Grow
In response, analysts raised their projections for NUVA citing its ability to gain market share in the $9 billion global spine procedure market, of which they are the 4th-largest player. NuVasive’s product portfolio saw strong performance in several segments with 12% growth in lumbar, 27% in cervical, and 11% in biologics.
International revenue grew 31% in the third quarter, despite headwinds in Latin America. Last quarter, management had lowered its full-year international revenue growth guidance to 25% and reiterated this expectation despite improved performance this quarter.
Japan is another strong growth region expected to contribute around $8 million this year, assuming currency headwinds will be less of an impact than expected. We traded NUVA for the FTM Portfolio in April and May for a 10% gain just as they were opening a new office in Japan.
Back to Japan
In a press release earlier this year, here was how the company saw new opportunities for their products as they opened that office in the second-largest spinal surgery market in the world…
The MAS platform combines several categories of solutions that collectively minimize soft tissue disruption during spine surgery with maximum visualization and safe, easy reproducibility for the surgeon: a proprietary software-driven nerve avoidance system and intra-operative monitoring support; MaXcess, a unique split-blade retractor system; a wide variety of specialized implants; and several biologic products to aid in the spinal fusion process.
MAS provides access to the spine from the side of the body rather than from the front or back. This significantly reduces surgery time and returns patients to activities of daily living much faster than conventional approaches. Having redefined spine surgery with the MAS platform’s lateral approach, known as eXtreme Lateral Interbody Fusion, or XLIF, NuVasive has built an entire spine franchise.
With over 80 products today spanning lumbar, thoracic and cervical applications, NuVasive will continue to expand and evolve its offering predicated on its R&D focus and dedication to outstanding service levels supported by a culture of Absolute Responsiveness.
Analyst price targets for the next 12 months range from $36 to $44. This Zacks #1 with an impressive beat and raise definitely looks attractive in the low $30’s.
Kevin Cook is a Senior Stock Strategist for Zacks where he runs the Follow The Money portfolio.
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