Here’s Why you Should Retain Nevro Stock in Your Portfolio Now – December 17, 2024

Nevro (NVRO Quick QuoteNVRO – Free Report) is well-poised for growth in the coming quarters, courtesy of its technological innovations and diversification plans regarding its product portfolio. The optimism, led by a solid third-quarter 2024 performance and continued focus on research and development activities, is expected to contribute further. However, concerns regarding softness in the spinal cord stimulation (SCS) market and dependence on third-party payers persist.

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This Zacks Rank #3 (Hold) company’s shares have lost 80.7% in the year-to-date period against the industry’s 5.2% growth. The S&P 500 has increased 27.7% in the said time frame.

The renowned global medical device company has a market capitalization of $152.5 million. The company projects 9.9% growth over the next five years. Nevro’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 42.73%.

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Reasons Favoring NVRO’s Growth

Market Expansion into SI Joint Fusion: Nevro’s expansion into the (SI) joint fusion market is a strategic move designed to broaden its product offerings beyond the established SCS market and to compete against newer treatment therapies that have emerged earlier in the care continuum, impacting demand for its prized SCS portfolio. This diversification will allow the company to keep patients on its platform, realizing sustainable growth and a faster path to profitability and value creation. The global SI Joint fusion market was valued at $721.2 million in 2023 and is expected to witness a CAGR of 19.8% between 2024 and 2030.

In November, NVRO announced the publication of new data in the journal, Medical Devices: Evidence and Research, demonstrating the superiority of the Nevro1 sacroiliac (SI) Joint Fusion System (Nevro1).

The acquisition of Vyrsa Technologies in December 2023 allowed Nevro to introduce a complementary line of products to treat chronic pain caused by the SI joint. By adding this product line, Nevro aims to capture a share of the growing pain management market that focuses on joint-specific conditions, addressing a significant portion of patients who may not be suitable candidates for SCS.

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Continued Technological Innovations Buoys Optimism: Nevro is advancing its technology to improve patient outcomes with its 10 kHz Therapy. In September, the company introduced the HFX iQ system featuring AdaptivAI technology. Unlike traditional static therapies, this AI-driven innovation personalizes pain relief by adapting to changes in a patient’s pain and quality of life over time. Expected to launch fully in the United States by late 2024, this breakthrough positions Nevro as a leader in pain management and could boost its market growth significantly.

Solid Q3 Results: Nevro exited the third quarter of 2024 with better-than-expected results, with earnings and revenues beating their respective Zacks Consensus Estimate. Meanwhile, the company’s third-quarter revenues are affected by ongoing softness in the U.S. SCS market and competitive pressures.

However, NVRO is likely to witness growth opportunities in an underpenetrated SCS market with the launches of HFX AdaptivAI in the United States and HFX iQ in the European Union. The company’s diversification into SI joint fusion is likely to generate additional revenues.

Factors That May Offset the Gains of NVRO

Weakness in SCS Market: Even though the SCS market continues to provide opportunity and remain underpenetrated, Nevro is witnessing softness in this market lately as newer treatment therapies have emerged earlier in the care continuum ahead of SCS therapy and are causing delays in patients receiving SCS therapy. The SCS market has seen increased competition, driven mainly by new product launches over the past year by NVRO’s larger competitors.

NVRO believes that the newer therapies are, in some cases, delaying patients from getting SCS therapy and competing for its customers’ time and operating room schedules. These newer procedures, such as SI joint fusion, offer physicians who treat patients suffering from multiple causes of chronic pain more tools than ever before to treat their patients’ pain and, in some cases, their underlying functional etiologies.

Dependence on Third-Party Payors: Nevro’s success in marketing its products largely depends on whether U.S. and international government health administrative authorities, private health insurers, and other organizations adequately cover and reimburse customers for the cost of its products. Access to adequate coverage and reimbursement for SCS procedures using Senza by third-party payors is essential to customers’ acceptance of Nevro’s products.

A significant number of negative coverage and reimbursement decisions by private insurers may impair or delay the company’s ability to grow revenues.

Estimate Trend

Nevro has been witnessing a positive estimate revision trend for 2024. In the past 60 days, the Zacks Consensus Estimate for its loss per share has contracted by 27 cents to $2.40.

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The Zacks Consensus Estimate for the company’s fourth-quarter 2024 revenues is pegged at $100.4 million, indicating a 13.6% decline from the year-ago quarter’s reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Masimo (MASI Quick QuoteMASI – Free Report) , Accuray (ARAY Quick QuoteARAY – Free Report) and AxoGen (AXGN Quick QuoteAXGN – Free Report) .

Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 11.8% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.

MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 49.4% compared with the industry’s 6.7% growth year to date.

Accuray, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 1200% for 2025. Its earnings missed estimates in three of the trailing four quarters and met in one, delivering an average negative surprise of 141.97%.

ARAY’s shares have lost 32.2% against the industry’s 6.7% growth year to date.

AxoGen, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 252% for 2025. It delivered a trailing four-quarter average earnings surprise of 91.11%.

AXGN’s shares have risen 111% year to date compared with the industry’s 6.7% growth.