Nevro Corp NVRO is firing on all cylinders as evident from the impressive price appreciation in recent times. The medical device company closed at $66.25 on Dec 28, 2015, which reflects a two-month (60 days) return of almost 60%. Over the last one year, the stock has gained nearly 72% as compared with a decline of 1.2% in the S&P 500.
Moreover, positive estimate revisions over the last 60 days also reflected the increasing momentum at Nevro. The Zacks Consensus Estimate for 2015 has risen by 15 cents to a loss of $2.64 per share during the period. Similarly, the consensus estimate for 2016 has improved by 8 cents to a loss of $2.19 per share over the same period.
Nevro’s raised revenue projection for 2015, rollout of HF10 therapy in the U.S., growing international demand, inter partes review (IPR) win and the recent Centers for Medicare & Medicaid Services (CMS) approval for additional pass-through payment were the key factors that drove the estimates in our view.
In November, Nevro announced that Patent Trial and Appeals Board (PTAB) at the U.S. Patent and Trademark Office (USPTO) have denied instituting an IPR of its “102 patent.” In May, a unit of Boston Scientific Corp BSX filed two petitions challenging the validity of certain claims of the “102 patent.”
Meanwhile, CMS approved a transitional pass-through payment for HF10 therapy, which will be in addition to the established reimbursement for spinal cord stimulation devices. CMS determined that the Senza SCS System delivering HF10 therapy met the criteria for a new device category.
Nevro received U.S. FDA approval for its Senza SCS system in May this year. The system delivers Nevro's proprietary HF10 therapy, which helps in the management of chronic intractable pain of the trunk and/or limbs. Notably, the device has gained strong traction in Europe and Australia over the last five years.
In the third quarter of 2015, Nevro witnessed strong demand for its products in the European market, wherein revenues grew well over 100% on a year-over-year basis. The performance in Australia was also noteworthy, with 60% growth.
Based on its roll out in the U.S., Nevro raised its revenue projection for 2015 to a range of $59.5–$61.5 million, reflecting year-over-year growth of 83%–89%. The previously projected range, which included only international revenues, was pegged at $41–$43 million.
Zacks Rank and Other Key Picks
Currently, Nevro carries a Zacks Rank #2 (Buy). Other favorably ranked stocks in the same space are Fluidigm FLDM and Masimo MASI. Both stocks sport a Zacks Rank #1 (Strong Buy).
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