On Thursday, Oppenheimer adjusted its stance on Nevro Corp (NYSE:NVRO), changing the rating from Outperform to Perform. The revision follows Nevro's fourth-quarter 2023 revenue report, which aligned with the company's preliminary figures at $116 million. The firm observed a notable 29% year-over-year increase in the contribution from its Painful Diabetic Neuropathy (PDN) segment, which rose approximately 8% sequentially to $22.4 million. However, there was a 3% year-over-year decline in its core Spinal Cord Stimulation (SCS) business.
Nevro's market share in the core U.S. SCS segment presented mixed results for the fourth quarter of 2023. The company held 15.7% of the market based on sales and 11.6% based on units, as indicated in Exhibit 1. Looking ahead, Nevro has set its full-year 2024 revenue guidance to be between $435 million and $445 million, marking a modest increase of 2-5% year-over-year. This forecast is in line with the firm's and consensus estimates of $441 million and $445 million, respectively.
Despite the PDN segment's growth, the downgrade by Oppenheimer reflects concerns over the company's broader potential for significant growth. The firm acknowledges a misstep in the timing of its previous upgrade last year and suggests adopting a cautious stance. The recommendation comes as Nevro welcomes a new CEO tasked with steering the company towards improved performance.
In light of the recent financial results and the upcoming fiscal year, Oppenheimer has also made adjustments to its estimates. The firm has updated its expectations based on the fourth-quarter outcomes and the guidance provided for fiscal year 2024. Additionally, Oppenheimer has introduced its projections for fiscal year 2025. The move to a Perform rating indicates a neutral outlook, with a watchful eye on the company's future endeavors under new leadership.
InvestingPro Insights
As Nevro Corp (NYSE:NVRO) navigates through a period of transition with a new CEO at the helm, the company's financial health and market performance remain a focal point for investors. According to real-time data from InvestingPro, Nevro's market capitalization stands at $601.65 million. While the company's P/E ratio is not applicable due to a lack of profitability over the last twelve months, the P/E ratio (adjusted) for the same period is -5.87, reflecting the challenges the company faces in generating earnings.
InvestingPro Tips suggest that Nevro holds more cash than debt on its balance sheet, which could provide a cushion as the company works towards profitability. Additionally, liquid assets exceed short-term obligations, indicating a level of financial stability in the near term. However, it's important to note that analysts have revised their earnings downwards for the upcoming period, and net income is expected to drop this year. With no dividends being paid to shareholders and the anticipation that the company will not be profitable this year, investors may need to temper expectations for immediate returns.
Considering the performance metrics, the company's revenue growth over the last twelve months as of Q3 2023 was 6.97%, with a gross profit margin of 67.12%. These figures could be of interest to investors looking for signs of operational efficiency and market potential, especially in light of the recent downgrade by Oppenheimer. For a deeper analysis and more InvestingPro Tips, investors can visit https://www.investing.com/pro/NVRO. There are 6 additional tips listed in InvestingPro that could further inform investment decisions. To gain access to these insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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