NuVasive Stumbles, Investors Get A Concussion

All growth investors really want is a perfect record of unbroken, break-out growth. If companies do not deliver, the consequences are severe. NuVasive (Nasdaq:NUVA) had established itself over the past couple of years as one of the prime medical device growth stocks, at least in the orthopedics space, but now that record means very little and investors are facing a painful fall on Friday. 

The Quarter That Was
NuVasive reported 27% revenue growth in third quarter, delivering about $120 million in sales. Unfortunately, the company hosted a pretty upbeat analyst meeting a couple of weeks before the end of the quarter and it seems probable that the enthusiasm from that meeting had investors expecting more than bottom-of-the-range revenue performance.

Gross margin did slip a bit on an annual and sequential basis, but the company's reported operating income did jump 57% and the operating margin jumped by 150 basis points.

Unfortunately, the company's guidance was very problematic. Management took fourth quarter revenue guidance down by about 10% and to a level that suggests minimal sequential growth. More troubling still, it is starting to look like the company is going to be hard-pressed to meet the old level of growth expectations for 2011, and those analyst revisions could be pretty harsh. (For more, see 7-Hot Medical Device Ideas.)

To read the full story, please go to:
http://stocks.investopedia.com/stock-analysis/2010/NuVasive-Stumbles-Investors-Get-A-Concussion-NUVA-SYK-MDT-EW-MASI-VOLC-IART1102.aspx